SYDNEY/WELLINGTON: The New Zealand dollar rallied for a second session on Wednesday as domestic jobs data showed an upbeat mix of falling unemployment and benign wage growth, while its Australian counterpart was underpinned by demand versus the yen.
The kiwi jumped nearly a full US cent to a high of $0.7842 after New Zealand's jobless rate dropped to a 5-1/2-year low as employment growth proved rapid enough to outpace the strongest population rise in a decade.
The reading boosted the kiwi to a 1-1/2-month high of 88.95 yen and a one-week top versus the Aussie around NZ$1.1165. Against a currency basket, its rose to 77.14, its highest in two weeks. "The jobs data was stronger than some in the market had been expecting," BNZ currency strategist Raiko Shareef said.
"The reaction indicates how skewed positioning was. Even though we've had this move higher over the past 24 hours, the market was still overwhelmingly short the kiwi, looking to target a break of $0.7700." Speculators have been betting on more downside for the kiwi after it briefly hit a 15-month low of $0.7698 earlier this week.
While the kiwi pushed further above key support at $0.7700, a wall of offers was seen around $0.7900.
The rally rubbed out slight losses suffered in offshore trade on news of a slight fall in global dairy prices at a fortnightly auction.
The Australian dollar steadied at $0.8741 after bouncing from a trough of $0.8644 touched on Tuesday, again thanks in part to short-covering.
The Aussie has been drawing demand against the yen since the Bank of Japan's shock move last week to expand its already massive asset buying campaign. With Japanese bond yields falling ever further, dealers anticipate Japanese funds will be seeking better returns abroad and Australian yields are among the highest in the rich world.
That helped lift the Aussie to 99.24 yen, up no less than three full yen since the BOJ's action.
Those gains helped offset another soft survey from China as the HSBC PMI for the services sector slipped to 52.9 in October, from 53.5 the month before.
The prospect of more Asian demand nudged Australian bond futures higher, with the three-year contract up 3 ticks at 97.460. The 10-year added 4 ticks to 96.70, while the cash yield dipped to 3.29 percent.
New Zealand bonds slipped in the wake of the jobs data, pushing yields 2 basis points higher across the curve.
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