Weak US payroll growth gives the NZD a spurt, but not quite enough to achieve technical parity

The New Zealand dollar took a run at technical parity with the Australian dollar in New York earlier this morning, but failed to quite make it.

"Parity" in the currency markets will be reached technically when the wholesale mid-rate is NZD = AUD.

Parity has already been reached for clients who wish to sell AUD to a bank. That was achieved on Tuesday.

Parity is still some way off for clients who wish to buy AUD from a bank.

The wholesale mid rate is not a place where any trades actually happen, even between very large institutions. There are 'points' to be paid, a 'spread' to be applied. Financial institutions are not charities and they will not do trades for zero margin.

But the 'parity' event, if and when it does arrive will be signaled by the wholesale mid-rate reaching NZD1 = AUD1.

The run today happened because of US dollar weakness.

Jobs growth in March in the US was weaker than markets were expecting, with new jobs growing only +126,000 in the month. Markets were expecting that growth number to be +250,000. They suspected it would be weaker than the +295,000 growth in February, but not as low as the +126,000 reported today.

That data caused the USD to sink.

Slow jobs growth means slower US consumer demand and that hurts Chinese manufacturers. And anything that hurts China, hurts Australia. We saw the AUD react much less versus the USD than the NZD which jumped against the greenback by a whole 1c.

The NZD gained ½c against the AUD on the US non-farm payrolls data.

But the mid-rate did not quite breach parity.

That party will need to wait for another day.

Here is a chart of mid-rate trading in the few minutes to 5pm in New York (10 am NZ time). Note it is the AUD-NZD view rather than the NZD-AUD view we usually display for these rates; parity in this chart is at the bottom

The more usual way we look at these rates - NZD-AUD - can be seen in this chart by clicking the AU$ tab.