NZ dollar rises to 5-week high vs Aussie ahead of labour market data

The New Zealand dollar jumped to its highest in almost five weeks against the Australian dollar, edging closer to its post-float high, as investors favour the outlook for the stronger New Zealand economy ahead of a report which may show the Australian labour market weakened last month.

The kiwi touched 95.81 Australian cents this morning, close to its Jan. 8 post-float record of 96.52 cents, and was trading at 95.74 cents at 8am in Wellington, from 95.50 cents at 5pm yesterday. The local currency slipped to 73.90 US cents from 74.21 cents yesterday.

While the Reserve Bank of Australia followed many others around the globe by cutting interest rates last week, New Zealand's central bank has said the local benchmark is likely to remain on hold for some time. That's lured investors to the higher yielding kiwi currency. The Australian economy has been hard hit by falling commodity prices, particularly iron ore, and economists expect the country's January unemployment rate may increase to 6.2 percent in a report today.

"The kiwi has been edging up, which is probably no surprise given the move by the RBA last week. It is just that hunt for yield," said Tim Kelleher, ASB Bank head of institutional FX sales in New Zealand.

"Ahead of Aussie jobs data today, it's hard to see it selling off," Kelleher said. "The Australian economy does appear to be in decline. If the Aussie jobs are weak it is certainly going to push higher again."

Still, those gains are likely to be limited by investors prepared to sell around 96 Australian cents to 96.50 cents, he said.

The Australian labour data, which has been volatile, will be published at 1.30pm New Zealand time.

Also in Australia today, RBA assistant governor, financial markets, Guy Debelle, will speak at the FX Week Australia Conference in Sydney, at 11am New Zealand time.

In New Zealand today, the BNZ-BusinessNZ Performance of Manufacturing Index is scheduled for release at 10am.

The New Zealand dollar fell to 65.36 euro cents from 65.56 cents yesterday as traders await the outcome of a Eurozone finance ministers meeting about Greece's debt.

The local currency slipped to 48.49 British pence from 48.66 pence yesterday ahead of the Bank of England's inflation report, and edged up to 88.85 yen from 88.71 yen. The trade-weighted index slipped to 76.98 from 77.09 yesterday.