NZ dollar gains as employment figures point to strengthening labour market

The New Zealand dollar rose more than half a US cent after government figures showed growing strength in the labour market as local employers soak up an excess supply of new migrants and returning kiwis.

The kiwi dollar recently traded at 78.37 US cents from 77.68 cents immediately before the release. New Zealand's unemployment rate fell to 5.4 percent in the September quarter, from 5.6 percent in the June period, with 0.8 percent employment growth outpacing a 0.4 percent expansion of the working age population.

"You can't really argue with the fact that the New Zealand employment situation is humming along, which confirms to me why the New Zealand is elevated and at unsustainable levels," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "It's a pretty obvious reaction to the headline numbers."

The kiwi dollar has remained persistently high in the face of falling commodity prices, prompting the Reserve Bank to intervene in foreign exchange markets earlier this year as it looks to build momentum for a fall. New Zealand's currency has been a favourite among traders as the strong economy has prompted earlier interest rate hikes than comparable nations, making it an attractive asset for investors.

ANZ's Tuck said the kiwi has bounced back from testing a key support level and was still trading in a range between 77 US cents and 79 cents.

US employment figures this week will continue to dominate the broader direction of the currency, with signs of strength in the US labour market likely to fuel optimism the Federal Reserve is on track to start raising interest rates next year.

The dollar index, a measure of the greenback against a basket of currencies, fell from a four-year high in New York trading after weaker than expected US trade figures, and as the price of oil dipped, cooling demand for oil exporting nations' currencies.