Kiwi Extends Rally as Unemployment Rate Drops to Three-Year Low
- New Zealand’s Unemployment Rate Fell to 6.0% in 4Q, the Lowest in Three Years
- Kiwi rises against the U.S Dollar following Labor Market Data
- Strong Fundamentals weigh on RBNZ Interest Rate Prospects
The New Zealand extended a rally that began early in the day Tuesday evening after a report showed the country’s fourth quarter (4Q) unemployment rate dropped to 6.0% - the lowest level in three years. A moderating aspect to this data, however, was the fact that the outcome was ‘in-line’ with expectations. Shortly after the data hit the wires, the Kiwi advancedanother 30 pips to 0.8255 against the U.S Dollar, keeping the recent uptrend in tact. With the employment rising and the jobless falling, the economic picture looks brighter and yield expectations more buoyant.
Last week, Reserve Bank of New Zealand Governor Graeme Wheeler kept the main cash rate on hold at 2.50%, but cited that a rate hike is expected “soon”. Inflationary pressures, broader growth and now employment trends further support expectations of a shift towards rate hikes from the central bank. According to Credit Suisse-derived overnight credit swaps, the rate market is fully pricing in a 25 bps rate hike at the RBNZ March 12th meeting that would lift the benchmark lending rate to 2.75 percent.
Chart Created by Daniel Giardina using Marketscope 2.0
Written by Daniel Giardina, DailyFX Research Team.
Questions, comments or concerns can be sent to firstname.lastname@example.org
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.