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NZ dollar heads for 0.9% fall as US jobs report looms

The New Zealand dollar is heading for a 0.9 percent weekly decline against the greenback as investors continue to rally behind the US dollar in anticipation of a rate hike next year, and ahead of a key US jobs report.

The kiwi fell to 77.78 US cents at 5pm in Wellington from 78.49 cents on Friday in New York last week. That's little changed from 77.80 cents at 8am and up from 77.46 cents yesterday. The trade-weighted index advanced to 77.28 from 78.07 yesterday, and is little changed from 77.37 a week ago.

A BusinessDesk survey of 11 traders, strategists and brokers on Monday predicted the local currency would trade between 76.50 US cents and 79.70 cents this week. Eight thought the currency would decline while two picked it to trade higher and one said it would remain relatively unchanged.

The kiwi dollar has been on the back foot this week as falling commodity prices, a stronger US economy and weak Australian data weighed on the currency's outlook. Traders are waiting for the US non-farm payrolls report on Friday in Washington for another steer on the US recovery ahead of the Federal Open Market Committee's policy meeting this month. Investors are anticipating the Fed will hike interest rates next year as it shifts away from running an ultra-loose policy since the global financial crisis.

"What often happens on payrolls day is that the market will shut down before payrolls. The risk is it could be worse than market expectations because of the weather - it was colder," said Imre Speizer, market strategist at Westpac Banking Corp. "That would be a downer for the greenback and an upper for the kiwi."

Westpac's Speizer said the greenback had been well-supported this week, though it pared back some of those gains after the European Central Bank decided against injecting extra stimulus into the regional economy at yesterday's meeting.

Next week the focus for the kiwi will come from Fonterra Cooperative Group's forecast payout to farmers when the board meets on Monday, and the Reserve Bank's policy review on Thursday, which is expected to see a reduction in the future pace of rate hikes.

The kiwi rose to 92.76 Australian cents at 5pm in Wellington from 92.30 cents yesterday, and gained to 93.22 yen from 92.87 yen. It slipped to 62.79 euro cents from 62.93 cents yesterday, and rose to 49.66 British pence from 49.40 pence.