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NZ dollar at 10-day low as risk appetite fades

Published: 02 Jul 2009 17:11:10 PST

WELLINGTON, July 3 - The New Zealand dollar <NZD=> fell nearly 2 percent to a 10-day low on Friday as weak U.S. jobs data sent investors shunning risk and chasing safe havens.

* Kiwi resumes locally around $0.6280/90 after it had retreated from a high of $0.6415 as high-yield and commodity currencies were knocked lower after the U.S. dollar and yen bound higher on poor jobs data.

* U.S. employers shed 467,000 jobs in June, far more than expected, with the unemployment rate rising to 9.5 percent [ID:nN01210643], renewing doubts about economic recovery.

* The U.S. dollar also bolstered by comments from a Chinese foreign ministry official that dampens speculation about the diversification of currency reserves. [ID:nPEK137542]

* European Central Bank (ECB) leaves rates unchanged at 1 percent, but euro pressured by comments from ECB head Jean-Claude Trichet that growth in the euro zone will be weak for the rest of the year. See [ID:nL2512532]

* Sentiment towards the kiwi has soured with analysts pointing to NZ$4.5 billion in NZ dollar denominated bonds maturing this month amid fears that much of it will not be rolled over. [ID:nWEL46118] Outlook for key dairy export sector also looks weak after latest Fonterra auction sees prices down 3 percent. {ID:nWEL508383]

* NZ dollar steady against the Aussie <NZDAUD=R>, but softer against both the euro <NZDEUR=R> and Japanese yen <NZDJPY=R>. NZ dollar trade weighted index <=NZD> down around 1.2 percent.

* NZ government accounts for the 11 months to May 31 due at 10 a.m. (2200 GMT), but no other local data so kiwi likely to be driven by broader market moves, with risks to the downside. U.S. markets closed on Friday for Independence Day holiday.

* Kiwi seen supported at $0.6250 with resistance at $0.6330.

* NZ swap rates lower with two-year swaps <NZDSM3NB2Y=> eight basis points down at 3.67 percent and five-year swaps <NZDSM3NB5Y=> five basis points lower at 5.17 percent.

* NZ bonds open firmer with yields up to six basis points lower after U.S. Treasuries gained on the weak jobs data. ---------------July 3 snapshot at 9.00 a.m. (2100 GMT)----------

(figures in brackets from July 2) 90-DAY BILLS (SEP) 97.20 (PREV 97.21) 90-DAYS 2.82 (PREV 2.82) 90-DAY BILLS (DEC) 97.14 (PREV 97.12) 07/09 2.60 (PREV 2.60) 90-DAY BILLS (MAR) 96.90 (PREV 96.88) 11/11 3.69 (PREV 3.73) NZD TRADE WEIGHTED 60.20 (PREV 60.96) 04/13 4.67 (PREV 4.72) NZD/USD 0.6280/87 (PREV 0.6388/92) 12/17 5.81 (PREV 5.87) NZD/AUD 0.7909/17 (PREV 0.7908/20) RBNZ MCI -210 (PREV -151) NZD/EUR 0.4483/89 (PREV 0.4522/27) US 10-YR 3.50 (PREV 3.54) NZD/JPY 60.22/32 (PREV 61.66/74) AU 10-YR 5.51 (PREV 5.52) *** SPREADS: NZ/US 10-YR +231 (+233) NZ/AUS 10-YR +30 *** ----------------------------------------------------------------