WELLINGTON (Dow Jones)--The New Zealand dollar closed steady Friday after flirting earlier in the session with a near three-week high as support from equity markets and the Australian dollar encouraged buying. The Kiwi's next direction will be set by the strength of U.S. nonfarm payrolls data due later Friday, said Custom House Western Union dealer Chris Hunter. If the data meet, or are better than, consensus--a gain of 515,000 jobs in May--the U.S. dollar may get a lift, as may high-yield currencies like the New Zealand dollar, he said. "The Kiwi is maintaining its strength. It's come off its highs but there is a fair amount of support." Hunter said there had been some tentative moves recently to try and push the Kiwi higher, including a move to US$0.6899 earlier Friday, its highest level since May 18, so if the jobs data are on track, or better, then the trend would continue. "Given the recent turmoil in the wider market, there are a lot of investors sitting on the sidelines waiting to get back into a bit of risk," he said. If the jobs data fail to move the Kiwi, the currency may have to wait for impetus from Thursday's Reserve Bank of New Zealand Official Cash Rate review where the central bank is almost universally forecast by economists to begin a tightening phase. Most economists expect the bank to deliver a relatively hawkish statement along with a 25 basis point rate hike and forecast a brighter economic outlook that should support the Kiwi. The debt market, where swap rates closed a couple of basis points lower and bonds strengthened a tad, was also in a holding pattern ahead of the U.S. jobs figures, a Wellington-based trader said. A lot of risk had been taken off the table ahead of the announcement "so maybe there won't be that big a reaction," he added. He said after that after the New Zealand holiday Monday, the market would refocus on domestic issues and the RBNZ statement, particularly if there is another session of stability in global markets. Should the RBNZ not hike, the market would be surprised and "we would get quite a good rally," he said. A lot would come down to the tone of the bank's statement. "If they put their bearish cap on and say the offshore stuff is just swimming in the background and not really a concern, and their focus is to get back to neutral, then you may get a bit of reaction." "You will get a whole new wave of people putting on positions, because the tightening has happened so you could see some mortgage book paying and you may get corporates looking to re-engineer their swap books," the trader said. National Australia Bank's (NAB.AU) Bank of New Zealand unit announced Friday it is launching a covered bond program of up to NZ$3 billion, with the bonds rated AAA by Fitch and Moody's. Other Australian banks are expected to launch similar programs. -By Simon Louisson, Dow Jones Newswires; 64-4-471-5990; simon.louisson@dowjones.com

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