Improved risk appetite and strong domestic employment figures boosted the New Zealand Dollar during Australasian trading and helped the currency advance on a struggling Euro.
The report showed that employment increased by 1.1 per cent in the fourth quarter of 2013, almost twice as much as the 0.6 per cent gain forecast.
The participation rate also rose, as did average hourly earnings.
New Zealand’s unemployment rate fell to 6.0 per cent from 6.2 per cent and now stands at its lowest level since 2009.
Despite the impressive data supporting the case for interest rates being increased, ‘Kiwi’ movement was a little stilted, although the commodity-driven currency did advance on the Pound and US/Australian Dollars.
The employment figures prompted this remark from forex manager Sam Tuck; ‘The details of the report just reconfirm what people already knew: that the New Zealand economy is really strong and that the Reserve Bank of New Zealand is going to have to hike rates. Despite positive surprises in almost every aspect of the report the markets took it relatively in their stride and are still focused on external events.’
As European trading got underway the New Zealand Dollar was able to extend gains against the Euro as final services PMI figures for the Eurozone and Germany showed expansion, but fell short of previously forecast levels.
German services PMI came in at 53.1 rather than the 53.6 expected, while Eurozone services PMI came in at 51.6 rather than 51.9.
Eurozone composite PMI also disappointed expectations, advancing from 52.1 in December to 52.9 in January rather than achieving the 53.2 predicted.
Speculation that today’s Eurozone retail sales report will show a 0.7 per cent decline also weighed on the Euro as trade progressed.
Although the rest of the week promises little in the way of influential economic news for New Zealand, with the ECB policy announcement approaching considerable EUR/NZD movement could still occur.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3519 ,
Euro,,British Pound,0.8286 ,
Euro,,Australian Dollar,1.5190 ,
Euro,,New Zealand Dollar,1.6491 ,
Euro,,Canadian Dollar,1.4963 ,
[/table]
