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NZ dollar rangebound ahead of U.S. jobs; debt soft

Published: 05 Nov 2009 20:52:59 PST

* Kiwi stuck around $0.72 in muted session

* Struggles near three month low against Aussie

* Looks to U.S. jobs for direction

WELLINGTON, Nov 6 - The New Zealand dollar held to a narrow range on Friday, under pressure from the firm Australian and U.S. currencies ahead of U.S. jobs data that might offer new evidence on the economic recovery.

Strong numbers in the data are likely to be positive for the kiwi and other high yielders, while a disappointing outcome will likely see demand for the safe haven of the U.S. dollar and yen.

But beyond the data, the kiwi, which has proved attractive to investors because of its high yield, is seen struggling.

"Given the present frame of mind towards risk aversion, the risks are likely asymmetrical, whereby outcomes 'as expected' are likely to disappoint and dampen the NZ dollar further," TD Securities senior strategist Annette Beacher said in a market report.

The NZ dollar was at $0.7220/24 at 0400 GMT, compared with $0.7187/92 in Thursday's late local trading. It ranged between $0.7195 and $0.7221.

It struggled against a stronger Australian dollar that got a lift from an upbeat monetary statement from the Reserve Bank of Australia. The kiwi fell to three-month low of A$0.7888 <NZDAUD=R> before rebounding slightly.

The RBA said interest rates would likely have to rise gradually next year as it sharply upgraded its growth forecasts, although it was silent on the near term rate outlook. [ID:nSYD171144]

Next week sees the Reserve Bank of New Zealand's six-monthly report on the financial system, as well as third-quarter retail sales and October month house sales and prices.

The data will be watched for further evidence that the emergence from recession seen in the second quarter has picked up pace, and whether that might bring forward the RBNZ's tightening cycle.

New Zealand government debt was weaker as the demand for the safe haven of bonds receded. The benchmark 10-year bond <NZ10YT=RR> yield closed 2 basis points higher at 5.75 percent.