WELLINGTON: The New Zealand dollar dropped against its trans-Tasman counterpart after Australian jobs data showed the unemployment rate fell below 6 percent for the second time in 18 months, boosting the relative appeal of Australia’s currency.
The kiwi fell to 91.70 Australian cents from 92.70 cents immediately before the release and 92.99 cents yesterday. The local currency was little changed at 65.56 cents from 65.55 cents at 8am and down from 65.81 cents yesterday.
The Australian dollar jumped after Bureau of Statistics figures showed the unemployment rate fell to 5.9 percent in October from 6.2 percent in September, eroding expectations the Reserve Bank of Australia will cut rates again next month. Australia added 60,000 jobs in the month, and lifted its participation rate 0.1 percentage points to 65 percent.
“Today’s all about the employment report in Australia, which quite frankly, was stunning,” said Sam Tuck, senior FX strategist at ANZ Bank New Zealand. “Kiwi/Aussie moved quite dramatically, and that’s really the story of the day.”
ANZ’s Tuck said the kiwi may face more downside against its Australian counterpart if dairy prices continue to fall, with whole milk powder futures pricing pointing to another decline.
New Zealand government data today showed food prices fell in October on cheaper milk, while private reports showed manufacturing activity slowed last month and consumer confidence improved.
