Dollar falls ahead of US nonfarm payrolls which stoke US rate hike bets

The New Zealand dollar fell ahead of US labour market figures that may add to the case for the Federal Reserve to raise interest rates from near zero next month.

The kiwi traded at 65.95 US cents as at 5pm in Wellington, having earlier fallen as low as 65.68 cents, from 66.58 cents late yesterday. The trade-weighted index slid to 71.40 from 71.76 yesterday.

US nonfarm payrolls, which are closely watched by the Fed, are expected to show the world's biggest economy added 180,000 jobs last month, while the unemployment rate held at 5.1 percent. That's probably strong enough to keep intact bets that the Fed will hike next month after Fed chair Janet Yellen told the Congress that the December meeting was a "live possibility" for an interest rate hike, sending the greenback broadly higher. The unofficial ADP Research Institute report yesterday showed US companies added 182,000 workers last month, following a 190,000 increase in September.

"We're now in crouch and hold mode ahead of nonfarm payrolls tomorrow night," said Stuart Ive, senior dealer at OMF. "Anything above 150,000 jobs would be regarded as reasonably positive and anything above 200,00 would be absolutely stellar. The figures would have to be significantly lower to dampen US dollar strength."

Ahead of the labour market data, traders will be watching for speeches by Federal Reserve Bank of New York president William Dudley, Fed vice chairman Stanley Fischer and Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, Ive said.

"We need data to convince us they're not going to raise - it is very, very clear (there will be a hike) but it is still data dependent," he said. 

The New Zealand dollar fell to 92.16 Australian cents from 92.34 cents yesterday. The kiwi slid to 42.86 British pence from 43.16 pence yesterday ahead of the Bank of England's quarterly inflation report and policy review today, where no change is expected.

The local currency fell to 60.64 euro cents from 60.78 cents yesterday, dropped to 80.11 yen from 80.66 yen, and declined to 4.1846 yuan from 4.2163 yuan.

The two-year swap rate was unchanged at 2.76 percent and the 10-year swap rate rose 1 basis to 3.57 percent.

(BusinessDesk)