Thursday, the New Zealand dollar soared to new multi-day highs against its European and Japanese counterparts as the nation's unemployment rate rose to a 5-year high in the fourth quarter of 2008, pointing to more interest rate cuts by the Reserve Bank of New Zealand.
Statistics NZ reported today that the unemployment rate rose to 4.6 percent from 4.2 percent reported at the end of the third quarter. Unemployment was 1.2 percent higher than it was one year earlier.
Surprisingly, employment rose 0.9 percent in the fourth quarter, after increasing 0.1 percent in the previous quarter.
New Zealand's economy has been in recession since the start of 2008 but the slowdown has only just started to hit the previously tight labour market, which in late 2007 had a jobless rate of 3.4 percent, a 22 year low.
Like other countries, New Zealand policy makers are scrambling to support the economy, which proved to be a magnet for investors in recent years because of high interest rates.
Last week, the Reserve Bank of New Zealand trimmed interest rates to a record low of 3.5 percent, bringing its total easing to 4.75 percentage points since July 2008.
The RBNZ Governor Alan Bollard said after the latest cut there was room for further rate reductions, to counter a recession expected to last at least until mid-2009.
The New Zealand dollar showed strength against the US currency during early deals on Thursday. At about 5:25 am ET, the kiwi-greenback pair hit 0.5148, up from Wednesday's close of 0.5077. The near term resistance level for the kiwi is seen at 0.516.
In early trading on Thursday, the New Zealand dollar advanced to a 6-day high of 46.24 against the yen. The next upside target for the kiwi-yen pair is seen around the 48 level. At yesterday's North American session close, the pair was quoted at 45.42.
Against the euro, the New Zealand dollar gained in early deals on Thursday. The euro-kiwi pair that closed yesterday's trading at 2.5315 reached 2.5005 by about 6:05 am ET. This set an 8-day high for the kiwi. On the upside, 2.485 is seen as the next target level for the NZ currency.
The Italian CPI and the German factory orders report, which were released today likely influenced the euro.
Italy's consumer price index including tobacco rose 1.6% year-on-year in January after rising 2.2% in December, a preliminary report from the statistical office ISTAT showed. Economists had expected consumer prices to grow 1.8% in January. On a monthly basis, consumer prices were down 0.1%, at the same pace recorded in December.
German factory orders dropped 6.9% month-on-month in December compared to a revised 5.3% decrease in November, the Federal Ministry of Economics and Technology reported. Economists had predicted just 2.5% fall.
The New Zealand dollar strengthened against the Aussie after falling to a 1-week low of 1.2762 by about 2:05 am ET Thursday. Presently, the aussie-kiwi pair is worth 1.2634, compared to 1.2686 hit late New York Wednesday. If the kiwi climbs further, it is likely to target the 1.257 level.
Looking ahead, the European Central Bank is scheduled to announce its interest rate decision at 7:45 am ET. The ECB is widely expected to leave its key rate unchanged at 2 percent after four months of cuts. But financial markets will look for signals of what further steps it might take to shore up the euro zone economy.
Last month, the ECB last trimmed its key policy rate by 0.5 percentage point to 2.0 percent, bringing it to the lowest level since the single European currency was introduced in 1999.
Across the Atlantic, the US Labor Department is due to release its customary weekly jobless claims report for the week ended January 31st at 8:30 am ET.
At the same time, the Labor Department is scheduled to release its preliminary report fourth quarter non-farm productivity and unit labor costs. The consensus estimates call for a 1% increase in non-farm productivity.
At 10:00 am ET, the Commerce Department is due to release its report on factory goods orders for December. Orders for manufactured goods are likely to have decreased 3% in the month.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.