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NZ dlr struggles amid caution, as U.S. data eyed

Published: 05 Nov 2009 17:34:32 PST

WELLINGTON, Nov 6 - The New Zealand dollar <NZD=> struggled on Friday in the aftermath of poor job data and central bank comments as the U.S. currency rose ahead of employment report.

* Kiwi resumes around $0.7210, compared with $0.7187/92 in late local trade on Thursday, as appetite for risky assets such as the kiwi was muted and investors readied for U.S. non-farm payrolls later on Friday.

* Kiwi hits an offshore low of $0.7160 after data showed NZ's jobless rate hit a nine-year high, backing the case for rates to be held low well into next year.

* Weaker than expected NZ labour data, which showed unemployment rising to a nine year high, pressured kiwi along with Reserve Bank of NZ governor's comments that financial markets were mistakenly treating the Australian and NZ economies as similar, when the reality was that NZ's recovery was slow and vulnerable. See [ID:nWEL164600].

* Markets see Bollard's comments as a "green light" to sell kiwi against the Aussie <NZDAUD=R>, sending it to a three-month low and pressuring the kiwi lower against other crosses.

* However, markets still pricing in a full rate hike in March because of improving local economic data.

* European Central Bank and Bank of England both leave rates unchanged, but express more optimism about the economic outlook. [ID:nL5394422]

* Kiwi seen susceptible on the downside as it fails to rally when equities are doing well. Strong resistance seen around $0.7300, with support expected around $0.7170.

* NZ bonds steady, as steady U.S. rate outlook favours short-end U.S Treasuries, but upcoming supply weighs on the long end of the curve. -------------(06 November 2009 09:45 / 2045 GMT)-------------

(Last prices as at 6pm NZ time the previous day) 90-DAY LIVE 2.79 (2.80) NOV-2011 4.260 (4.255) 90-DAY (DEC) untraded (97.14) APR-2013 5.036 (5.030) 90-DAY (MAR) 96.89 (96.9) DEC-2017 5.720 (5.720) 90-DAY (JUN) untraded (96.15) MAY-2021 6.020 (6.020) RBNZ MCI 208 (205) US 10YR BOND 3.529 (3.512) NZD TWI 64.73 (64.69) AU 10YR BOND 5.642 (5.625) NZD/USD 0.7208(0.7196) NZ/US 10YR SPD +219bp(+221bp) NZD/AUD 0.7923(0.7947) NZ/AU 10YR SPD +8bp (+9bp) NZD/EUR 0.4846(0.4847) NZ 2YR SWAP 4.470 (4.470) NZD/JPY 65.40 (65.01) NZ 5YR SWAP 5.620 (5.620) --------------------------------------------------------------- - (