Kiwi steady as US payrolls show flat wages, Brexit deal nudges along

The New Zealand dollar held steady against the greenback after US employment figures continued to show flat wages in the world's biggest economy, but edged lower against the British pound after UK and European officials made progress in their Brexit negotiations.

The kiwi traded at 68.34 US cents at 8am in Wellington from 68.38 cents on Friday in New York. The local currency dipped to 51.05 British pence from 51.14 pence last week.

US non-farm payrolls showed jobs increased by 228,000 in November, continuing a robust run. Annual wage growth rose 2.5 percent, a slower pace than anticipated. US Federal Reserve policymakers are expected to raise the key interest rate this week, but like other central banks around the world, they are struggling with the low inflationary environment. Meantime, the pound got a short-lived boost on signs of a breakthrough in the UK's negotiations to leave the European Union.

"The USD sold off slightly following slightly softer than expected US wage growth. But expectations for a 25 bps rate rise from the FOMC (Federal Open Market Committee) this week limited this and capped bonds," ANZ Bank New Zealand rural economist Con Williams said in a note. "NZD expected to start the week tentatively, but unlikely to break through downside support of 68.20 US cents."

At a speech in Auckland this morning, Finance Minister Grant Robertson reiterated the broad thrust of the government's economic thinking ahead of this week's half-year economic and fiscal update and made clear there would not be the usual slew of pre-emptive policy announcements before next May's Budget.

"The plan is already out there," he told an Auckland business audience ahead of Thursday's release of both the HYEFU and the annual Budget Policy STatement. "The first steps towards Budget 2018 will come this Thursday."

Local data today include November consumer spending on credit and debit cards.

The kiwi slipped to 58.06 euro cents from 58.21 cents on Friday in New York and declined to 77.55 yen from 77.74 yen. It fell to 90.97 Australian cents from 91.18 cents last week and decreased to 4.5240 Chinese yuan from 4.5353 yuan.

The trade-weighted index was little changed at 72.49 from 72.54 last week.

(BusinessDesk)