NZ currency: Dollar retreats

The New Zealand dollar retreated from 10-month highs after the New Zealand unemployment rate rose more than expected to six per cent in the June quarter.

Westpac senior market strategist Imre Speizer said the NZ dollar only fell about 20 points to US67.10c on the report and consolidated until Australian unemployment data arrived.

The Australian market had been expecting a 6 per cent unemployment rate but their number was 5.8 per cent.

"It looked like it was good so the aussie went roaring up and kiwi followed," said Mr Speizer.

On closer inspection the Australian number was re-assessed as employers had been keeping people on but they had been working fewer hours.

The NZ dollar was US67.12c at 5pm, down from US67.39c at 8am and US67.20c at 5pm yesterday.

The New Zealand Manufacturers and Exporters Association called on the Reserve Bank of New Zealand to cut its official cash rate now.

Mr Speizer said there were no policy implications from the unemployment report because the central bank had been expecting 5.9 per cent unemployment rate.

He said strong rises in milkpowder prices at Fonterra's monthly internet auction yesterday morning were still a positive factor.

The NZ dollar had risen as high as US67.60c in overnight trading. Its strength is creating doubts about the economic recovery.

Overnight the NZ dollar reached a 9-1/2-month high of 64.45 yen and a nine-month high of 0.4689 euro. It even managed to reach a one-week high against the similarly strongly performing Australian dollar of A80.45c.

By 5pm today the NZ dollar was buying 63.80 yen, 0.4659 euro, and A79.50c from 63.85 yen, 0.4665 euro and A79.75c at 5pm yesterday. The trade weighted index fell to 62.02 at 5pm from 62.16 yesterday.

- NZPA