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Kiwi back below US73 cents after jobs blip

NZ NewswireNZ Newswire 4/09/2016 Jonathan Underhill

The New Zealand dollar begins the week little changed, having temporarily spiked higher on Friday in the US after weaker-than-expected non-farm payrolls, with the market still of the view that the Federal Reserve will raise interest rates in December.

The kiwi traded at US72.81 cents at 8am on Monday in Wellington from US72.88c in late New York trading on Friday. It spiked as high as 73.57 cents after the payrolls data. The trade-weighted index was little changed at 77.63, having climbed as high as 78.10 after the data.

The US economy added 151,000 jobs last month, fewer than the 180,000 expected by the market, while the unemployment rate crept up to 4.9 per cent from 4.8 per cent and average hourly earnings gained 0.1 per cent versus expectations for 0.2 per cent.

Bets for a December rate hike by the Fed, reflected in the swaps market, were unchanged with odds of 75 per cent. By then, traders expect the Reserve Bank will have cut the official cash rate a quarter point to 1.75 per cent at its monetary policy statement on November 10.

"Although the report showed headline payrolls were below expectation, as was hourly earnings growth, the market appeared to ultimately interpret it as a 'goldilocks' report. i.e. not so hot as to spur the Fed into imminent action, but not so cold as to suggest the economy is ailing," said BNZ senior market strategist Kymberly Martin.

On Monday morning the New Zealand dollar fell to 95.95 Australian cents from A96.26c in New York on Friday. It increased to 75.70 yen from 75.54 yen and fell to 4.8570 yuan from 4.8683 yuan. It was little changed at 65.22 euro cents from 65.33 cents and declined to 54.71 British pence from 54.84p.

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