Kiwi bounces back on retail figures

THE New Zealand dollar pared its losses on Tuesday after government figures showed growth in retail sales across most sectors and regions in the first three months of the year.

The kiwi rose to 82.90 US cents at 5pm in Wellington from 82.40 cents at 8am, little changed from 83.05 cents on Monday. The trade-weighted index fell to 77.46 from 77.67.

New Zealanders increased their spending 0.5 per cent in the three months ended March 31, according to Statistics New Zealand, short of the 0.8 per cent growth forecast, but with gains in most industries and across almost all regions.

A fall in spending on apparel held back the headline number, with fewer people buying new clothes due to an unseasonally warm autumn.

The improving retail environment across most of New Zealand bolstered investors' optimism that the economic recovery isn't limited Auckland and Christchurch.

"It's a good mix of the retail sector performing reasonably well, but with not a lot of inflationary pressure to knock it," said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney.

"When the US dollar is firm then the kiwi is likely to not get quite as buoyant as it was a few weeks ago."

Foreign investors continued to support New Zealand's government bonds and Treasury bills in April, accounting for two-thirds of the $43.03 billion on issue, according to Reserve Bank figures. That's the highest proportion of non-residents holding New Zealand government securities since November 2008.

Australia's government will unveil its budget on Tuesday night, ahead of New Zealand's budget on Thursday, though both are unlikely to have much impact on currency markets.

The New Zealand dollar slipped to 82.97 Australian cents on Tuesday afternoon, from 83.07 cents at 5pm on Monday and dropped to 84.11 yen from 84.49 yen.

It slid to 63.71 euro cents from 63.99 cents and was little changed at 54.12 British pence from 54.09 pence.

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$A lower ahead of jobs figures

THE Australian dollar is nearly a third of a US cent lower ahead of the release of key monthly employment figures.

At 0700 AEST on Thursday, the currency was trading at 101.71 US cents, down from 102.01 US cents on Wednesday afternoon.

Westpac New Zealand senior market strategist Imre Speizer said the Australian dollar traded in a fairly narrow range overnight with positive global sentiment preventing it from falling below the 101.55 US cent level it dropped to in the wake of Tuesday's interest rate cut.

"It's been stuck just above that level and it is probably being held by the global market sentiment which is pushing equity markets higher," he said.

The Reserve Bank of Australia cut the cash rate to a record low of 2.75 per cent at its monthly board meeting, which reduced demand for the currency.

Mr Speizer said the main driver for the currency on Thursday would be the release of the Australian Bureau of Statistics' labour force figures for April at 1130 AEST.

An AAP survey of 14 economists shows a median forecast for the unemployment rate to be steady at 5.6 per cent for April with total employment growing by 11,000.

He said the currency was likely to move higher if the data showed stronger-than-expected jobs growth and fall if the figures were weaker than expected.

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Dollar higher after US job figures

THE Australian dollar is higher after a strong US employment report for April gave the market reason to be optimistic about the world's largest national economy.

At 1200 AEST today, the local unit was trading at 102.81 US cents, up from 102.54 cents on Friday.

The Australian dollar rallied at the end of last week after US economic data showed the country's unemployment rate fell 0.1 per cent to 7.5 per cent in April.

However, it lost a little ground after the Australian Bureau of Statistics said local retail spending fell 0.4 per cent in March, but was up 2.2 per cent in the March quarter.

Commonwealth Bank currency strategist Joseph Capurso said the Australian dollar had shown a bit of a knee-jerk reaction to the retail figures.

"It's lost 20 or so points after that retail report came out," he said.

"The market seems to have focused on that retail number, which was weaker that expected.

"As people crunch the numbers, the Aussie dollar will track higher."

Mr Capurso said the market would closely watch the outcome of the Reserve Bank of Australia's board meeting tomorrow.

All 13 economists surveyed by AAP last week said they don't think the RBA will reduce the cash rate from its current level of three per cent but the futures market is pricing in a 57 per cent chance of a cut.

"I don't think the RBA will cut the rate tomorrow and the (Australian) labour force data out later in the week should snap back higher, so the Aussie should end the week up around 104.00 US cents," Mr Capurso said.

Meanwhile, Australian bond futures prices were lower at noon.

At 1200 AESTtoday, the June 10-year bond futures contract was trading at 96.895 (implying a yield of 3.105 per cent), down from 96.960 (3.040 per cent) on Friday.

The June three-year bond futures contract was at 97.460 (2.540 per cent), down from 97.500 (2.500 per cent).
 

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$A rises on strong jobs figures

THE Australian dollar rose by more than half a US cent after the release of stronger than expected jobs figures.

Australia's unemployment rate was steady at 5.4 per cent in February, with total employment up by 71,500 to 11.628 million, according to seasonally adjusted figures released by the Australian Bureau of Statistics.

Economists had expected total employment to rise by 8,000 in February and an unemployment rate of 5.5 per cent.

At 1138 AEDT, the Australia dollar was worth 103.65 US cents, up from 103.04 US cents just before the data release.

The currency ended Wednesday's local session at 103.14 US cents.

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Aust bonds weaker on US jobs figures

AUSTRALIAN bond futures are weaker following the release of better than expected US jobs data.

US non-farm payrolls figures released on Friday night (Australian time) showed the unemployment rate fell from 7.9 per cent to 7.7 per cent in February, with 236,000 jobs added to the economy.

Westpac senior market strategist Damien McColough said the improved figures caused a sell-off in fixed-income assets, including US Treasuries.

"We've had a weak lead following the payrolls number," he said.

"Treasuries are a bit weaker so we're following them."

Mr McColough said bond futures could sell off further this week, especially if three-year futures prices fell below 97.000.

"A break below that would be quite important, whenever you get a big level like that it becomes a bit of a magnet."

At 0830 AEDT on Monday, the March 10-year bond futures contract was trading at 96.435 (implying a yield of 3.565 per cent), down from 96.480 (3.520 per cent) on Friday.

The March three-year bond futures contract was at 97.040 (2.960 per cent), down from 97.070 (2.930 per cent).

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