WSJ: NZ Dollar Up Late But Range Bound Ahead Of Key Local, Global Events
WELLINGTON (Dow Jones)--The New Zealand dollar was trading higher late Wednesday after getting a boost from risk appetite overnight but remained range bound ahead of key local and international events.
Greg Gibbs, currency strategist at RBS, said Thursday's Household Labour Force Survey data are in focus.
Economists are expecting the data to show that unemployment reached 6.8% in the fourth quarter as companies continued to feel the impact of the protracted slowdown.
Gibbs said the data would likely be negative for the Kiwi as it would add to the view that the Reserve Bank of New Zealand won't be raising interest rates in the short term.
Last week, the central bank held the Official Cash Rate at a record low 2.5% and said if the economy continues to recover in line with its projections, it expects to begin removing policy stimulus around the middle of 2010.
Gibbs said the market also remains cautious ahead of rate decisions from the European Central Bank and the Bank of England this week, as well as Friday's U.S. jobs report.
Bank of New Zealand Strategist Mike Jones said the Kiwi had come under some pressure over the course of the session as markets remain jittery about European sovereign solvency, in particular regarding Greece, Portugual and Spain.
Jones said the market is waiting for a view from the European Commission, the executive arm of the European Union, on Greece's austerity plan due later in the global trading day.
On the local front, Jones said that any negative outcome in Thursday's jobs data could push the Kiwi below a current support of around US$0.6970.
Government bonds ended higher while interest rate swaps pushed lower after the Reserve Bank of Australia surprised financial markets Tuesday by leaving its cash rate target unchanged at 3.75%.
The market rate decision came just as the New Zealand market was closing so the bulk of the reaction came Wednesday, a local trader said. He said Thursday's jobs data would be closely watched for further direction.
By Rebecca Howard, Dow Jones Newswires; 64-4-471-5990; rebecca.howard@dowjones.com
