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Kiwi falls on stronger US job data

NZ NewswireNZ Newswire 3/08/2016 Jonathan Underhill

The New Zealand dollar has fallen after private payrolls data in the US printed stronger than expected and as traders look ahead to next week's Reserve Bank statement and the extent of easing that may be built in.

The kiwi dollar fell to US71.55 cents as at 8am on Thursday in Wellington, from US72c late on Wednesday. The trade-weighted index slipped to 76 from 76.46.

US companies added 179,000 jobs last month, according to the ADP Research Institute, exceeding the 170,000 forecast and suggesting the official government figures due on Friday will show America's labour market is still growing at a healthy clip, one of the requirements for a Federal Reserve interest rate hike.

By contrast, traders expect the Reserve Bank to cut the official cash rate a quarter point to 2 per cent next week and signal it is still in easing mode, reducing the yield premium on offer in the kiwi.

"While it's debatable how good an indicator of wider labour conditions this survey is, some will nudge their payrolls forecasts higher," said Westpac's Imre Speizer.

"The uncertainty generated by Brexit plus further RBNZ easing should be negative for the NZD, although partly offset by a weaker US dollar near term," he said, adding that he expected the kiwi to fall to US69c.

Traders are putting 96 per cent odds on RBNZ governor Graeme Wheeler cutting the official cash rate after its latest survey showed expectations for low inflation are becoming entrenched.

On Thursday morning the kiwi fell to 72.43 yen from 73.58 yen and slipped to 64.17 euro cents from 64.25c.

It fell to 53.71 British pence from 54.44p and dipped to 4.7445 Chinese yuan from 4.7893 yuan.

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