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NZ dlr succumbs to shock jobs data, drags on Aussie

09 November, 2012 - Reuters
  • NZ jobless rate jumps to 13-yr high
  • Markets imply one-in-five chance of rate cut in Dec
  • Aussie hampered despite robust Australia jobs data

By Mantik Kusjanto and Cecile Lefort

WELLINGTON/SYDNEY, Nov 8 (Reuters) - The New Zealand dollar fell broadly on Thursday after a shock jump in the country's jobless rate to a 13-year peak revived speculation of a rate cut, holding the Australian dollar back as well.

The kiwi skidded to $0.8157, a cent and a half lower from Wednesday's late trade, after the unemployment rate climbed to 7.3 percent in the third quarter. That was up from 6.8 percent and confounded forecasts of a dip to 6.7 percent.

The currency last fetched $0.8171 with major support seen near $0.8081, the 200-day moving average.

The weak jobs report lead investors to narrow the odds of an easing in the official cash rate (OCR), with financial markets now implying a one-in-five chance of a 25 basis-point rate cut in December, from 13 percent earlier in the week.

Some analysts, though, remained sceptical.

"A clear downside for monetary policy, but on its own probably not sufficient to provoke an OCR cut," said Westpac chief economist Dominick Stephens.

In sharp contrast, Australia delivered a robust labour report showing employment increased 10,700 in October, beating forecasts of a flat outcome. The jobless rate held at 5.4 percent, when analysts had expected a tick up to 5.5 percent. Full-time jobs also rose a solid 18,700.

The numbers initially sent the Aussie dollar a quarter of a cent higher to a session peak of $1.0433. But the gains could not be held and it lapsed back to $1.0400.

"Ultimately the jobs numbers, while firmer than expected, were not dramatically so and with very weak New Zealand labour force data, there was a bit of a drag," said Greg Gibbs, a strategist at Royal Bank of Scotland in Singapore.

Also weighing on the commodity currencies was a slide in Asian equities as worries about a U.S. fiscal cliff came back into focus.

Still, the Aussie remained in sight of a near seven-week peak at $1.0480 and the Sept. 21 high of $1.0519.

Traders cited decent selling interest around $1.0440/50, with stops just above, while buyers were stationed around $1.0370/90 with stops below $1.0360.

The better labour data did lead investors to lengthen the odds of an easing in December, after the Reserve Bank of Australia (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, versus 64 percent before the data, while swaps put it at 57 percent, versus 68 percent.

The kiwi suffered broadly, with the biggest fall against the Aussie which skyrocketed to NZ$1.2746, its highest in nearly two months. It was last at NZ$1.2729. The kiwi also lost 0.5 percent on the day against the yen.

New Zealand government debt prices rose, pushing yields 3.5 basis points lower across the curve.

Australian debt tracked a sharp rally in Treasuries with the three-year contract adding 0.04 points to 97.390, while the 10-year contract was 0.05 points higher at 96.940.

Copyright Thomson Reuters 2012. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

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