New Zealand dollar trades above US$0.59

Daily Currency Update

The New Zealand dollar is slightly stronger this morning when valued against the Greenback currently trading at 0.5986 at time of writing. The New Zealand dollar continues to be underpinned by Wednesday's better-than-expected employment details, which lowered the likelihood of a rate cut by the Reserve Bank of New Zealand (RBNZ). Last week Statistics New Zealand said the nation's jobless rate rose to 4.6% in the second quarter, from an upwardly revised 4.4% in the previous three months, while employment increased 0.4% versus the prior quarter. Economists polled by Reuters had forecast a 4.7% unemployment rate and a 0.2% contraction in employment. While quarterly wage growth increased more than forecast, with the private sector labour cost index (LCI) excluding overtime rising 0.9%, the annual rate fell to its lowest level in two years at 3.6%. Last month, the RBNZ held the cash rate steady at 5.5%, but opened the door to monetary policy becoming less restrictive over time should inflation slow as expected. The central bank expects inflation to return to within 1% to 3% target range in the second half of this year, down from 3.3% in the second quarter. Nevertheless, spot prices remain on track to register strong gains for the second straight week as the focus now shifts to the crucial RBNZ rate decision and the US consumer inflation figures, both due on Wednesday.