NZD down as focus shifts to Aussie
The New Zealand dollar was lower Thursday as traders soured on the currency in favor of a resurgent Australian dollar.
The Aussie dollar jumped after data showing a sharp drop in the Australian unemployment rate in October. The jobs surge was enough to see markets trim back expectations of further interest rate cuts by the Reserve Bank of Australia.
Unemployment in Australia fell to a seasonally adjusted 5.9% in October, from 6.2% in September, as the number of new jobs created in the month soared by 58,600, of which two-thirds were full-time positions.
The strength of the data was enough to prompt some forecasters to abandon expectations of further rates cuts by the Reserve Bank of Australia.
At times considered one of the more downbeat forecasters on the Australian economy, Goldman Sachs said it now sees no change in the official cash rate until 2017.
Previously, Goldman had been forecasting a further 50 basis points of cuts in coming months.
At 5:20 a.m. GMT, the New Zealand dollar was at US$0.6548, from US$0.6576 late Wednesday. Earlier, it traded around a high of US$0.6577.
Sean Callow, currency strategist at Westpac, said the only explanation for the weakness in the New Zealand dollar was traders reassessing the central bank outlook in Australia.
The Australian dollar surged against the New Zealand dollar after the jobs data. It climbed from around NZ$1.075 to NZ$1.0910.
Mr. Callow said fair value for the cross currently looks to be NZ$1.11 to NZ$1.12. Further support should come to the cross amid confident bets that the Reserve Bank of New Zealand will cut interest rates next month.