Being the focus of the Asian session, was the surge exhibited by the kiwi dollar after witnessing encouraging economic data readings, thus further strengthening the prospect that the New Zealand central bank (RBNZ) will raise interest rates faster than expected.
According to a report published by Statistics New Zealand earlier this morning, the unemployment rate fell sharply to 4% in the second quarter, from 4.6% recorded in the first quarter.
This recorded reading is the lowest since December 2019 and is below pre-COVID levels after the implementation of coronavirus closure saw the unemployment rate rise to 5.3% last year.
The kiwi dollar surged higher following the report, trading around a nearly one -month high as investors began to predict that the figure would increase the likelihood for an interest rate hike.
The currency had garnered support to rise in the previous session, during which the RBNZ reportedly would soon begin discussions on tightening in mortgage lending standards in a bid to control the rising housing market and protect home buyers.
Data shows New Zealand has passed full employment, and the economy is getting too hot, ANZ Bank said.
ANZ Bank expects that interest rates will be raised at the August, October and November meetings, with two more increases in February and May, bringing the interest rate at a terminal rate of 1.5% by mid -2022.
