The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate fell by over 0.7% on Thursday due to a variety of factors.
The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate declined in the immediate aftermath of the Reserve Bank of New Zealand’s (RBNZ) interest rate decision.
As expected by economists, the central bank held the official cash rate at 3.5%. However, RBNZ Governor Graeme Wheeler surprised markets by insinuating that interest rate increases will be introduced next year if the economic situation allows.
Although the RBNZ did stress that the current strength of the New Zealand Dollar is unjustified, particularly given the recent fall in dairy prices, the ‘Kiwi’ still jumped by 1.6% against the US Dollar and was trending in a stronger position against the Pound, Euro and Australian Dollar.
The RBNZ increased its growth forecast for the 2015-2016 financial year to 3.1% from 2.6% and stated; ‘Some further increase in the official cash rate is expected to be required at a later stage.’
The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate later pared some of its declines as a result of Australia’s employment report.
AUD/NZD gains were initially recorded following the data publication as the Australian economy was shown to have added considerably more positions than expected in November.
While a jobs gain of 15,000 had been forecast, the nation actually added 42,700 positions.
The participation rate increased from 64.6% to 64.7%.
However, the Australian Dollar’s gains were fleeting and the AUD/NZD exchange rate fell as investors digested the facts that the Australian unemployment rate climbed from 6.2% to 6.3% and the employment gains were driven by increases in part-time positions.
Industry expert Mark Mulligan said of the result; ‘It was the fastest pace of jobs growth since March 2012, but also the highest unemployment rate for more than 12 years. Before rounding off, the official unemployment rate climbed from 6.25 per cent to 6.26 per cent. The figures were much better than expected, and the Australian dollar spiked about half a US cent before retreating a little to settle around US83.60 cents. However, the Australian Bureau of Statistics said many of the new jobs – in fact 36,400 – were part-time positions for women. A total of 23,300 men were newly employed, offset by a net fall in overall jobs for women of 21,400.’
Further Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate movement could occur in the hours ahead following the publication of New Zealand’s Business Performance of Manufacturing Index and China’s Industrial Production/Retail Sales stats.
The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is currently trading in the region of 1.0580.
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