The New Zealand labor market report, published late in the evening yesterday, proved to be a strong positive surprise for the local market. The unemployment rate fell to 5,3% in Q4 from 6,0% in Q3, beating the consensus estimates of 6,1%. Furthermore the employment grew in quarter-over-quarter and year-over-year terms printing at 0,9% (prior: -0,5%; consensus: 0,8%). Additionally, although the year-over-year employment slowed down, to 1,3% from 1,5%, it still beat the consensus of 1,1%.
NZD is the strongest currency in G10 early in the morning, gaining 0,7% vs. USD.
Wheeler (RBNZ chairman)
Strong labor market report was not the only factor behind the strengthening of New Zealand dollar. Kiwi was also supported by Graeme Wheeler’s speech yesterday, as he said that the monetary authorities will avoid mechanistic approach to the low inflation, which could be read as a postponing the potential rate cut.
Additionally he said that the headline inflation is low chiefly due to negative tradeables inflation and fall in oil prices, which would be inappropriate to respond with the rate cut to the latter. Nevertheless, RBNZ governor said, that should the outlook for global economy and its impact on New Zealand deteriorate, some further monetary policy easing may be needed to anchor future average inflation lose to the middle of the target range.
The statement comes as a much more hawkish, following the latest RBNZ statement, where bank said that some monetary easing may be needed in coming years.