Much stronger than expected jobs data for the June quarter put a rocket under the kiwi dollar today.
It roared up to two-month high of US63.43c after Statistics New Zealand reported 22,000 new jobs were created in the quarter instead of zero, as forecast by economists.
The kiwi ended at US63.35c compared with US62.60c at 5pm yesterday.
Jobs data in Australia today was almost as strong as here and against the Australian dollar, the kiwi only ended a tad higher at A82.34c from A82.62c.
But it made on other crosses and the trade-weighted index closed on a one-month high of 62.92 from 62.51 yesterday.
BNZ currency strategist Danica Hampton said she thought the kiwi would kick higher.
"It definitely looks like it's got a bullish bias in the near term," she said.
A break through resistance at US63.45c would see it probably break above US64c. Near-term support had risen to US62.80c, she said.
While the jobs data was much stronger than the Reserve Bank had anticipated, and indicated there was much more life in the economy than economists believed, she doubted bank governor Alan Bollard would lift interest rates again.
However, he was likely to delay implementing the easing cycle and BNZ had officially put that prospect back to the second quarter of 2007 from the first quarter.
"I think Alan Bollard was pretty clear the other day when he said basically he had taken rate hikes completely off the table. I don't think that's in his mind-set.
"I think it really does mean we are going to delay the easing even further."
She noted monetary conditions were tightening anyway as a result of the currency firming.
ANZ bank today said two separate camps of NZ dollar buyers had emerged. Offshore accounts had bought the kiwi as they chased yield, but local players remained unconvinced.
Macquarie Economic Research said there appeared to be some short term support for the kiwi.
It had been dragged higher by the strengthening aussie, resurgent NZ commodity prices and a stronger-for-longer interest rate theme.
Meanwhile, the euro hit a record high against the low-yielding yen while the US dollar inched towards a two-month low versus the euro as investors favoured currencies where interest rates are expected to keep rising.
Among major currencies, the yen is the least attractive destination for foreign investors because of the still hyper-low overnight rates offered in Japan.
That is likely to be reinforced if the Bank of Japan holds rates at 0.25 per cent on Friday, as widely expected, at the end of a two-day policy meeting.
"The euro could have another interest rate hike in the near future and the yen is going to take time to do anything, so it seems safer to sell yen crosses," said the chief trader at a European investment bank in Tokyo.
But with central banks in the euro zone and Britain likely to keep bumping up rates this year, the appeal of holding the US currency may be diminishing, traders said.
Rates:
5pm today 5pm yesterday
NZ dlr/US dlr US63.35c US62.60c
NZ dlr/Aust dlr A82.34c A82.62c
NZ dlr/euro 0.4920 0.4895
NZ dlr/yen 72.90 72.43
NZ dlr/stg 33.24p 32.93p
NZ TWI 62.92 62.51
Australian dollar US76.91c US75.78c
Euro/US dollar US1.2879 US1.2793c
US dollar/yen 115.09 115.67
- NZPA
<i>Currency:</i> Jobs data puts a rocket under the kiwi
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