NZ dlr struggling after weak jobs, Aussie feels risk pressure
09 November, 2012 - Reuters
WELLINGTON/SYDNEY, Nov 9 (Reuters) - The New Zealand dollar was languishing around a two-week low on Friday, while the Australian dollar was just holding its own as investors fixated on the euro zone's debt woes and the looming U.S. fiscal crunch. Market awaiting the Reserve Bank of Australia's (RBA) statement on monetary policy at 0330 GMT, a 70-odd page assessment of the economy that could see a slight downgrade to growth projections. The central bank will likely expound on why it skipped a chance to cut rates this week, while still leaving the door open for an easing in the next few months. Also key will be Chinese data on inflation, industrial production and retail sales for October. Further signs of a soft landing would tend to supportive of the Aussie. New Zealand dollar around $0.8150, from Thursday's late local level of $0.8171. It shed nearly three-quarters of a cent on Thursday after jobs data showed a shock jump in unemployment to 7.3 percent. The kiwi now butting up against support of $0.8135, the Oct 24 low, below which sits the psychological $0.8100 and the more substantial $0.8081, the 200-day moving average. Resistance seen at the daily high of $0.8200/10. The Australian dollar outperforms, but feeling pressured at around $1.0406, from Thursday's late local level at $1.0412. It ranged $1.0395 to $1.0437 overnight. Aussie seen facing sellers around $1.0440/50, with more substantial resistance at Wednesday's $1.0480 daily high, while buyers seen around $1.0370/90 and more solid support at $1.0330. The euro hit a two-month low against the dollar after the European Central Bank held interest rates at a record low and said there is not much more the bank can do to help Greece with its debt burden. See The U.S. dollar index gains as investors look at the so called "fiscal cliff", the $600 billion in government spending cuts and higher taxes which will kick in early next year, unless U.S. lawmakers move to reduce the deficit. Investor concern and move to safety has ironically seen increased demand for Treasuries, which boosted the dollar. Euro a touch weaker on the Aussie at A$1.2244 but at a week high against the kiwi at NZ$1.5636. Aussie 0.75 percent down on a firmer yen at 82.56 yen
, while kiwi 1.3 percent lower at a two-week low of 64.65 yen . The kiwi suffers on the Aussie, which surged to a two-month high of NZ$1.2763 . New Zealand's weak jobs report prompts some talk of grounds for a cut in the Reserve Bank of NZ's cash rate (OCR). Financial market pricing implies a 20 percent chance of a 25 basis-point rate cut in December, from 12 percent earlier in the week. A strong housing report from the Real Estate Institute of NZ shows house prices rising to record levels as demand outstrips slower supply growth. Earlier this week the RBNZ said house prices were becoming overvalued. Thursday's solid jobs report from Australia leads investors to lengthen the odds of an easing in December, after the RBA surprised some by not cutting the 3.25 percent cash rate at its policy meeting on Tuesday. Interbank futures show a 50-50 chance of a cut to 3.0 percent next month, while swaps put it at 57 percent . New Zealand government debt prices up in line with US Treasuries, sending yields as much as 4.5 basis points lower. Australian debt extends its rally with the three-year contract adding 0.06 points to 97.450, while the 10-year contract is also 0.06 points higher at 96.985.
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