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NZ dlr steady amid risk caution; U.S. data eyed

Published: 05 Nov 2009 17:45:01 PST

WELLINGTON, Nov 6 - The New Zealand dollar <NZD=> held steady against the U.S. currency on Friday ahead of a key U.S. employment report, but the currency remained under pressure against the Australian dollar on central bank comments.

* Kiwi stable around opening level at $0.7216/26, as 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.

* Kiwi also hit by Reserve Bank of New Zealand 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 comments as a "green light" to sell kiwi against the Aussie <NZDAUD=R>, sending it to a three-month low and pressuring the kiwi against other currencies.

* 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]

* Focus now on Reserve Bank of Australia's statement on monetary policy at 0030 GMT as no major data due in NZ on Friday.

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

* NZ bonds softer, as steady U.S. rate outlook favours short-end U.S Treasuries, but upcoming supply weighs on the long end of the curve. Local yields up to two basis points higher. -------------(06 November 2009 12:52 / 2352 GMT)-------------

(Last prices as at 6pm NZ time the previous day) 90-DAY LIVE 2.79 (2.80) NOV-2011 4.270 (4.255) 90-DAY (DEC) 97.12 (97.14) APR-2013 5.045 (5.030) 90-DAY (MAR) 96.86 (96.9) DEC-2017 5.740 (5.720) 90-DAY (JUN) 96.12 (96.15) MAY-2021 6.045 (6.020) RBNZ MCI 212 (205) US 10YR BOND 3.527 (3.512) NZD TWI 64.79 (64.69) AU 10YR BOND 5.715 (5.625) NZD/USD 0.7217(0.7196) NZ/US 10YR SPD +221bp(+221bp) NZD/AUD 0.7922(0.7947) NZ/AU 10YR SPD +3bp (+9bp) NZD/EUR 0.4850(0.4847) NZ 2YR SWAP 4.475 (4.470) NZD/JPY 65.51 (65.01) NZ 5YR SWAP 5.645 (5.620) --------------------------------------------------------------- - (