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New Zealand Dollar Slumps After Jobless Rate Increases More Than Forecast
New Zealand’s dollar fell against all its most-traded counterparts after a report showed the jobless rate rose more than economists forecast.
The currency dropped for the first time in five days versus the greenback as traders cut bets that the central bank will raise rates at its policy meeting next month. Australia’s dollar fell from almost a three-month high against the greenback as a drop in U.S. stocks discouraged demand for currencies related to economic growth.
“The New Zealand dollar dropped sharply this morning following the higher-than-expected unemployment rate result,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “We saw last week the central bank move toward a slightly less hawkish stance, and I think this is another piece of data which backs up that stance.”
The kiwi fell 1.1 percent to 72.70 U.S. cents at 12:12 p.m. in New York, from 73.48 cents yesterday. Australia’s dollar dropped 0.4 percent to 91.32 U.S. cents, from 91.66 cents, after earlier rising to 91.75. It touched 91.84 U.S. cents yesterday, the strongest level since May 4.
New Zealand’s unemployment rate rose to a seasonally adjusted 6.8 percent in the second quarter from 6 percent in the previous three months, Statistics New Zealand said. Economists in a Bloomberg survey estimated a 6.2 percent rate.
“The market was clearly disappointed by the weaker-than- expected result,” Roland Randall, an analyst at Toronto- Dominion Bank in Singapore, wrote in a research note today.
Reserve Bank of New Zealand Governor Alan Bollard said on July 29 that deteriorating growth may slow the pace of rate increases, while raising the official cash rate to 3 percent.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net
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