8 Oct 2012

NZ dollar falls to month low after US data

1:43 pm on 8 October 2012

The New Zealand dollar fell to a one-month low against the greenback after better than expected US employment data stoked bets growth in the world's biggest economy is building momentum.

The New Zealand dollar fell to US81.60 cents at 8am, the lowest since 10 September, from 81.76 cents at the close of trading in New York and 82.41 cents at 5pm on Friday.

The trade weighted index was little changed on 72.93 from 72.89.

Friday's US unemployment rate was significantly better than expected, helping boost equities and risky currencies.

Official figures show the jobless rate stood at 7.8% in September, down from 8.1% in the previous month.

The effects were short-lived, with Wall Street's Standard & Poor's index falling 0.3%. The US jobless rate fell to 7.8% last month, the lowest level since January 2009, Labor Department data showed. Payrolls increased by 114,000 workers.

"We saw the kiwi going out reasonably bid in our time zone on Friday but that all changed with the surprise US payrolls data," said Stuart Ive, currency strategist at HiFX.

"This led to a broad commodities sell-off and the kiwi and the Aussie coming under pressure. It's leading some to question whether the Fed's monetary stimulus could drop off."

"We need at least two or three more months of data before the Fed will even consider it," Mr Ive said.

In September, US Federal Reserve Chairman Ben Bernanke announced the central bank would expand its holdings of long-term securities with open-ended purchases of $US40 billion of mortgage debt a month.

Markets in the US will be closed on Monday for Columbus Day.

The New Zealand dollar was little changed on 62.65 euro cents from 62.72 cents at the close of trading in New York.

The New Zealand dollar rose to 80.30 Australian cents from 80.18 cents and climbed to 64.17 yen from 64.30 yen. The kiwi increased to 50.59 British pence from 50.66 pence.