NZ dollar tumbles vs. Aussie in flip-flop trade

NZ dollar tumbles vs. Aussie in flip-flop trade after stronger jobs data

By Jonathan Underhill

April 16 (BusinessDesk) - The New Zealand dollar tumbled about 1 Australian cent, having flirted with another attempt at parity this week, after figures showed the jobless rate fell in Australia last month as the economy added jobs.

The New Zealand dollar fell to 97.85 Australian cents as at 5pm in Wellington, from 98.84 cents at the start of the day and from 99.03 cents late yesterday. The kiwi rose to 75.90 US cents from 75.20 cents yesterday.

Australia’s jobless rate unexpectedly fell to 6.1 percent in March from a revised 6.2 percent in February, while the number of people employed rose 37,700, government figures showed. The figures suggested the Australian economy isn't as moribund as feared, meaning a interest rate cut by the Reserve Banl of Australia next month to a record low 2 percent isn't a one-way bet. Still, that economy faces headwinds, with a Goldman Sachs report tipping further weakness in the price of iron ore long term.

"One set of numbers doesn't start a trend but the jobs report has taken everybody by surprise," said Stuart Ive, senior dealer at OMF. "Twenty four hours ago people were pretty much certain the RBA would cut rates next month. After the employment data does raise the question do they need to cut rates."

The kiwi has strengthened against the greenback since the GlobalDairyTrade auction last night. While the benchmark price measure fell 3.6 percent as volumes increased, the decline wasn't as severe as some had been expecting after a 10.8 percent decline in dairy prices at the last sale two weeks ago.

"The market was heavily short kiwi - that has flipped around," Ive said. " The data this afternoon has flushed a lot of those positions out of the market."

Also helping the kiwi were comments yesterday by Reserve Bank deputy governor Grant Spencer, calling on the government and Auckland Council to do more to tackle Auckland's over-heated property market.

"It looks exceptionally unlikely the RBNZ would cut interest rates to deal with Auckland," Ive said.

The kiwi traded at 71.01 euro cents, having reached a record 71.25 cents overnight, from 70.75 cents yesterday. The local currency gained 51.17 British pence from 50.96 pence and advanced to 90.58 yen from 89.95 yen. The trade-weighted index advanced 79.34 from 79.18 yesterday.

(BusinessDesk)

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