New Zealand Dollar (NZD) Exchange Rate: Employment Gain Boosts Rate Rise Bets
In the aftermath of the publication of upbeat employment data for New Zealand the ‘Kiwi’ advanced on the majority of its most traded currency counterparts.
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The New Zealand Dollar strengthened against the Pound, Euro and ‘Greenback’ and trimmed recent declines against the ‘Aussie’ as the domestic unemployment rate fell from 6.2 per cent to 6.0 per cent in the fourth quarter of 2013.
As the nation’s participation rate, employment change and average hourly earnings figures all surprised to the upside, the case for the Reserve Bank of New Zealand increasing interest rates within the next month or so is building.
In the opinion of senior economist Craig Ebert, ‘The labour market will be crucial for judging the economy and the path of monetary policy.’
The ‘Kiwi’ posted widespread declines after the RBNZ opted to leave interest rates unaltered at its latest meeting, but given recent reports it seems increasingly unlikely that the central bank will be able to refrain from increasing rates for much longer.
Meanwhile, the New Zealand Dollar’s gains against the Pound and Euro were aided by disappointing economic reports for the European nations.
While UK services PMI showed a slowing pace of expansion, Eurozone retail sales plummeted by almost double the forecast amount.
The NZD/GBP pairing is currently trading in the region of 0.5049, while the NZD/EUR pairing is currently trading in the region of 0.6074.
As the week progresses further New Zealand Dollar movement could be inspired by New Zealand’s house price report, although China’s services PMI and the ECB/BoE rate decisions are likely to have a greater impact on market volatility as the weekend approaches.