The New Zealand dollar touched a two-week high on Wednesday after the country's jobless rate dropped to near eight-year lows last quarter, fuelling speculation the central bank's easing cycle may be almost done. The New Zealand dollar climbed 0.4 percent to $0.7212, its highest level since Oct.20.
The kiwi had dropped 1.8 percent in October after the Reserve Bank of New Zealand flagged the need to lower interest rates at its policy meeting next week to stoke domestic inflation as well as restrain a resilient currency.
"The RBNZ needs to deliver a 25 basis points cut on November 10 to avoid driving the exchange rate higher. But the domestic data continues to argue against further easing, making it a difficult balancing act for the RBNZ," said Josh Williamson, an economist at Citi.
The kiwi is still up 5.5 percent so far this year, making it one of the best performing currencies in the developed world.
The Australian dollar was more sedate, taking a breather after three straight days of gains. It held at $0.7646, barely changed from the previous session.
It rallied 0.6 percent on Tuesday after the Reserve Bank of Australia left interest rates at 1.50 percent and refrained from including an explicit easing bias in its statement.
However, investors were nervous that the US election was turning out to be too close to call.
New Zealand government bonds slipped on the jobs numbers, lifting yields 5 ticks across the curve.
Australian government bond futures rose, with the three-year bond contract up 2 ticks at 98.30. The 10-year contract rose 3 ticks to 97.6700.
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