NZ dollar edges up toward 71 US cents ahead on US non-farm payrolls

The New Zealand dollar rose ahead of the release of US employment data, which is expected to build the case for a Federal Reserve rate hike this month and potentially more to come.

The kiwi dollar traded at 70.96 US cents as at 5pm in Wellington from 70.81 cents late yesterday. The trade-weighted index recovered to 78, little changed from the previous day, having dipped to 77.85 at the start of the day. The kiwi is heading for a one percent decline against the US dollar in the week.

The US economy added 180,000 jobs last month, figures due on Friday in the US are expected to show, up from 161,000 a month earlier, keeping intact expectations for this month's rate hike. The US dollar index is trading near its highest levels in 16 years on speculation President-elect Donald Trump's policies will stoke US economic growth and inflation.

"The past 24 hours has been a largely uninspiring trading window for the kiwi with investors already sitting on their hands ahead of this evening's non-farm payrolls report," traders at NZForex said in a note. "With the greenback still oscillating at levels just shy of a 16-year high, the greenback has the potential to further add to those gains should labour market figures confirm that the world's largest economy added in excess of 180 000 new jobs last month."

Adding to sentiment for the kiwi dollar, whole milk powder futures are pointing to another increase in prices at next week's GlobalDairyTrade auction. The average price for whole milk powder has jumped by almost two-thirds since mid-July and futures point to a 2.1 percent gain next week.

The two-year swap rate rose 1 basis point to 2.25 percent and the 10-year swap rate rose 6 basis points to 3.35 percent.

The local currency declined to 66.37 euro cents from 66.83 cents after Reuters reported that the European Central Bank planned to extend its bond purchases beyond March and may send a message at its policy meeting next week that the stimulus measures would end eventually. The kiwi was little changed at 95.69 Australian cents from 95.67 cents and declined to 4.8825 yuan from 4.8837 yuan. It traded at 80.73 yen from 80.86 yen.

The kiwi fell to 56.25 British pence from 56.56 pence late yesterday.

(BusinessDesk)