WELLINGTON (Dow Jones)--The New Zealand dollar was trading higher late Monday as jitters about European sovereign debt faded leading to improved risk appetite, and a broad-based weakening in the U.S. dollar encouraged investors to buy commodity-linked currencies. But interest in the NZ dollar petered out as traders await the start of U.S. trade to see if the market reacts further to U.S. non-farm payrolls data released Friday, said Western Union Business Solutions Corporate Dealing Manager Chris Hunter. "I suspect there is a little bit of holding back and waiting to see what's going to happen tonight; we are potentially going to see more fall out from the nonfarm payrolls data," Hunter said. The data show an increase of 39,000 jobs in the U.S. in November compared with market expectation of 150,000 jobs, prompting market participants to sell U.S. dollar in favor of other major currencies. Hunter added the market was also holding back in anticipation of policy meetings at the Reserve Bank of Australia Tuesday and the Reserve Bank of New Zealand Thursday. "While no one is expecting (the banks to make any major announcements), there is a chance they'll be a little bit more hawkish in their accompanying statements," Hunter said. If the outcome of the RBA's meeting causes the Australian dollar to rise against its U.S. counterpart, the Kiwi is likely to rise too. Bank of New Zealand Currency Strategist Mike Jones said he wouldn't be surprised to see those trading the NZ dollar to take on a more local focus this week in the run up to the meeting. "Like the Official Cash Rate Review before it, Thursday's meeting is likely to play things cool. The local recovery continues to frustrate, for the most part, and renewed global uncertainties also argue for the RBNZ to sit with its stimulative 3.00% OCR setting for the near future," Jones said. Elsewhere, the bond curve for New Zealand government debt steepened, with the April 2013 yield falling 4 basis points to 4.10% as it remains well bid in the market, said a local bond trader. Meanwhile the number of sellers in the long end is pushing down the yields on longer term debt. The trader added that the market was no longer really trading the November 2011 bond due to it maturing in less than a year. Interest rate swaps fell across the curve as market participants await the outcome of Thursday's central bank meeting.

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