The New Zealand dollar gained today after the release of employment data and comments of the central bank’s chief. The currency moved in a wide range, suggesting that trading was rather violent.
New Zealand employment grew 1.2 percent in the December quarter from the previous three months, exceeding the median forecast of 0.8 percent. At the same time, the unemployment rate climbed from 5.4 percent to 5.7 percent, frustrating analysts who predicted a drop to 5.3 percent. It was not a totally bad result though, as the increase of unemployment was caused by the higher participation rate after the record number of people (36,000) entered the job market.
Graeme Wheeler, Governor of Reserve Bank of New Zealand, eased concerns about a potential interest rate cut in his speech yesterday, reiterating that “a period of OCR stability is the most prudent option” and citing reasons against lowering borrowing costs. Yet he also noted that the currency remains excessively strong:
While the New Zealand dollar has eased recently on a TWI basis, the exchange rate remains unjustified in terms of current economic conditions, particularly export prices, and unsustainable in terms of New Zealandâs long-term economic fundamentals.
NZD/USD advanced from 0.7355 to 0.7403 and NZD/JPY rose from 86.47 to 86.95 as of 11:46 GMT today. EUR/NZD declined from 1.5597 to 1.5455.
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