Kiwi starts new week stable

21:10, Apr 07 2013

The New Zealand dollar has retained its strength against the greenback following more weak economic data out of the United States.

This morning the kiwi was trading at US84.16 cents, up from US83.99c Friday evening.

The Trade Weighted Index of major trading partners remained unchanged at 77.40. The greenback dropped after Friday's worse-than-expected United States jobs data for March raised concerns that the pace of recovery in the American labour market has slowed.

United States Labour Department data showed the economy added 88,000 non-farm jobs last month, well below the consensus forecast for a gain of 200,000.

The weak payroll report followed a weaker-than-expected ADP National Employment Report, a soft service sector number, and a poor manufacturing reading last week, with these reports all suggesting the world's largest economy has lost some momentum.

Westpac market strategist Imre Speizer said that while the United States data caused no more than a "blip" at the time, in the end the kiwi experienced a small rise.

"If you cast back a year, or two years, ago the idea was that bad economic data out of the US was bad for the kiwi," he said.

Now weak United States data meant the greenback fell, pushing the kiwi up, he said.

The yen was still reeling from the The Bank of Japan's decision to implement a level of monetary easing to fight deflation that was seen as a radical overhaul of policy.

The Bank of Japan pledged to inject about US$1.4 trillion (NZ$1.7 trillion) into the economy in less than two years.

The kiwi held up well throughout the week despite the weakening yen, Speizer said.

"In the end this points to the effects of easing in Japan not hurting the kiwi," he said.

The kiwi performed well on the crosses, recently trading at 81.16 Australian cents up from A80.69c at 5pm on Friday, and 64.86 euro cents, down slightly from 64.96.

It traded at 82.57 Japanese yen, up from 81.39 yen on Friday, and at 55.00 British pence, down from 55.16p.

Locally, investors would be watching out for the NZIER quarterly business confidence survey and the Australian jobs report this week.

However, most of the attention would be on US Federal Reserve chairman Ben Bernanke and the Federal Open Market Committee for a clue as to when the United States would dial down its quantitative easing, Speizer said.

The kiwi was likely to continue its strong performance from the past few weeks, trading between US83.50c and US84.50c today, he said.