KEY POINTS:
The New Zealand dollar strengthened across the board today after jobs data seemed to confirm most economists' predictions the Reserve Bank will hike rates again on March 8.
Although employment growth in the December quarter was negative 0.1 percent compared with forecasts of 0.3 percent growth, the unemployment rate fell to 3.7 percent from 3.8 percent.
The residual strength in the labour market was enough to have economists predicting RB governor Alan Bollard will tolerate no more strength in the economy and would try to peg it back next month.
Higher interest rates invariably mean a higher currency and the kiwi obliged, buying US68.75c by the close of play today against US67.87c at the same time yesterday.
Against the aussie, it was up from A87.44c at 5pm yesterday to A88.08c today, against the euro it was at 0.5280 from 0.5230, and against the yen at 83.12 from 81.60. The trade weighted index closed at 68.30 from 67.48.
One dealer, who did not wish to be named, said there were mixed views in the forex market on whether Dr Bollard would hike. He said the view in his dealing room was that he wouldn't.
From a technical view, he said if the Kiwi broke through US68.60c then it was likely to jump to US69.20c.
The market had seen some unravelling of some short Kiwi, long yen positions today, he said.
In major currency trading, the yen dropped against the US dollar and euro amid increased expectations that Group of Seven finance ministers will not take a tough stance on the Japanese currency's weakness at their weekend meeting.
A senior official at Japan's Finance Ministry said the yen could be discussed at the G7 gathering in Essen, Germany, but that it was unlikely to be the main subject of the talks.
That followed comments from US Treasury Secretary Henry Paulson earlier this week, saying the yen's value was set by market fundamentals and suggesting Washington does not have a problem with the weak Japanese currency.
Rates:
5.00pm today 5pm yesterday
NZ dlr/US dlr US68.75c US67.87c
NZ dlr/Aust dlr A88.08c A87.44c
NZ dlr/euro 0.5280 0.5230
NZ dlr/yen 83.12 81.60
NZ dlr/stg 34.88p 34.45p
NZ TWI 68.30 67.48
Australian dollar US78.06c US77.65c
Euro/US dollar 1.3016 1.2984
US dollar/yen 120.87 120.17
- NZPA