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NZ dollar gains as data shows jobs growth

NZN 3/05/2017 Paul McBeth

The New Zealand dollar rose on Wednesday as stronger-than-expected employment figures and an unexpectedly big increase in dairy prices stoked demand for the local currency.

This lifted it from the 10-month lows it hit last week.

The kiwi climbed as high as US69.68c and was trading at 69.48c as at 5pm in Wellington from 69.18c Tuesday. The trade-weighted index rose to 75.37 from 74.99.

Government figures on Wednesday showed New Zealand's unemployment rate unexpectedly fell to 4.9 per cent in the March quarter as jobs growth rose 1.2 per cent, a faster pace than the growth in population.

While that showed signs of a tightening labour market, wage growth remained subdued meaning it won't drive up inflation and will likely keep the pressure off the Reserve Bank to hike interest rates.

A bigger increase than anticipated in dairy prices at the latest GlobalDairyTrade auction added to the upbeat tone for the kiwi.

"The headline levels in the labour market figures are strong and the market is tightening up with employment running along very nicely, but the wage inflation story is really non-existent and that's the more important message for the RBNZ here," ANZ senior economist Phil Borkin said.

"The kiwi got close to that 70 (US cents) level, but we've peeled off a little bit" as investors got past the headline numbers and looked more closely at the detail, he said.

Prime Minister Bill English said the kiwi was at a "pretty positive" level for exporters and near US70c or a little lower wasn't a bad balance for the country.

The kiwi rose to A92.51c from 91.66c late Tuesday after Australia's central bank kept its cash rate unchanged as expected.

It gained to 4.7872 yuan from 4.7672 yuan and rose to 77.84 yen from 77.37 yen. It gained to 63.55 euro cents from 63.37 cents and advanced to 53.81 British pence from 53.63 pence.

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