New Zealand Dollar to Australian Dollar (NZD/AUD) Exchange Rate – ‘Aussie’ at 8-year low

New Zealand Dollar to Australian Dollar exchange rate chart

The Australian Dollar is trading at an eight year low against its New Zealand cousin as the two Oceanic economies diverge and as negative employment data continues to drag.

The Australian currency plummeted against all of its peers yesterday following the release of a bad employment report. Investors abandoned ship as the report came in well below economist expectations and increased speculation that the nation’s economy is weakening in the wake of a slowing mining boom.

According to the Australian Bureau of statistics, employment fell by 22,600 in December, and Full time positions declined by 31,600. The data was far worse than economists had been forecasting. Full time positions were expected to rise by 7500.

The report also showed that the nation’s unemployment rate remained steady at 5.8% but that was only because the number of Australians that have given up looking for work rose. The overall participation rate declined to its lowest level since April 2006.

The New Zealand Dollar meanwhile continues to strengthen as economists expect interest rates move in a way that will favour the ‘Kiwi’. Rates are expected to rise and next week will see investors watching the latest inflation data closely to try and gauge when a rate hike will be implemented by Central Bank of New Zealand Governor Graeme Wheeler.

The smaller Oceanic economy is becoming more attractive to investors as a survey released earlier this week showed that business confidence in the country leapt to its highest level in 20-years. House prices also continue to rise.

Next week could see some volatility for the currency pair.

“The NZD/AUD pair could be under a little bit of risk if we get a benign CPI report on Tuesday. It’s probably vulnerable to a bit of a correction,” said an economist based in Wellington.