Kiwi falls v euro on signs of Macron win

The New Zealand dollar fell against the euro as early projections showed centrist Emmanuel Macron has won a decisive victory in the French presidential election, giving that nation a leader committed to the European Union.

The kiwi dropped to 62.64 euro cents as at 8am in Wellington from 62.96 cents in late New York trading on Friday. The kiwi fell to 69.04 US cents from 69.16 cents in New York.

Projections from French polling stations put Macron's lead over National Front candidate Marine Le Pen at 65 percent to 35 percent, a wider lead than had been predicted ahead of the poll, Reuters reported. Le Pen had threatened to take France out of the EU in a continuation of the populist nationalism that saw Britain's Brexit vote and the election of US President Donald Trump.

Macron's win "sets the scene for positive risk sentiment as the new week begins," said Jason Wong, currency strategist at Bank of New Zealand, in a note. "Traders were reluctant to go into the weekend with long positions in case of a shock Le Pen victory."

While the kiwi fell against the US dollar, the greenback was broadly weaker following the release of non-farm payrolls for April, which showed only modest wage inflation as US employers added 211,000 jobs in April, more than economists expected, but coming after a downwardly revised 79,000 gain in March. The jobless rate fell to 4.4 percent, the lowest in almost a decade. Wage inflation was unchanged on the month at 0.3 percent, based on average hourly earnings, for a year-on-year 2.5 percent.

"Downward revisions to wage data ensured that the annual gain of 2.5 percent, was no higher than it was 18 months ago," Wong said. "And so the puzzle of suppressed wage inflation - a global phenomenon - continued."

The market is now pricing in a 76 percent chance that the Federal Reserve hikes interest rates next month, he said. By contrast, no change is expected from the Reserve Bank of New Zealand when it releases its monetary policy statement on Thursday, keeping the official cash rate at 1.75 percent.

The trade-weighted index decreased to 75.12 from 75.27 in New York on Friday.

The kiwi traded at 93.10 Australian cents from 93.25 cents at the end of last week. It fell to 53.19 British pence from 53.31 pence, declined to 4.7624 yuan from 4.7728 yuan and traded at 77.93 yen from 77.97 yen.

(BusinessDesk)