Kiwi rally stalls as US jobs data, presidential election loom

The New Zealand dollar stalled its rally as investors prepare for US jobs figures in Northern Hemisphere trading after upbeat data yesterday and as the world's biggest economy prepares to elect its administration next week.

The kiwi traded at 82.64 US cents at 5pm in Wellington from 82.70 cents at 8am and holding most of its gain from 82.17 cents yesterday. The trade-weighted index advanced to 73.78 from 73.34 yesterday.

The currency is poised for a 0.5% weekly gain against the greenback and 0.9% on a trade-weighted basis.

The US probably added 125,000 jobs last month and had an unemployment rate of 7.9%, according to a Bloomberg survey of economists.

That comes after upbeat private survey of US jobs figures stoked optimism the labour market in the world's biggest economy may be showing signs of life after several years of stagnation.

Risk-sensitive assets rallied around the world, with Japan's Nikkei 225 index rising 1.3% in afternoon trading and Hong Kong's Hang Seng index up 1.1%.

"People are seeing upside in the payrolls and could be disappointed," says Joseph Capurso, currency strategist at Commonwealth Bank of Australia in Sydney. "The kiwi might come off a bit when the payrolls finally come out."

Investor optimism was bolstered by upbeat Chinese manufacturing figures yesterday, which showed industrial production expanded in October for the first time in three months.

Next week's US presidential election will continue to take centre stage for investors, with polling showing challenger Mitt Romney is neck-and-neck with incumbent Barrack Obama. Mr Obama received an endorsement from the Economist magazine this week.

"If the polls are right, it's not going to be clear on the day – we might not know on Wednesday, we might not know on Friday," Mr Capurso says. "In this environment, the market's not going to like uncertainty about who's going to be president given the massive fiscal problems facing the US."

The kiwi rose to 79.46 Australian cents from 79.19 cents yesterday, and advanced to 66.30 yen from 65.80 yen. It was stronger at 63.89 euro cents from 63.40 cents and rose to 51.26 British pence from 50.95 pence.

(BusinessDesk)