NZD/USD jumps on upbeat labour market release, sees downtrend in medium term

The New Zealand Dollar was able to appreciate overnight amid continuous risk aversion in the market. The recovery was partly due to upbeat labour market release for the fourth quarter of 2015, and largely due to the speech given by the governor of the Reserve Bank of New Zealand.

Graeme Wheeler stated that the central bank is likely to benefit from its flexible inflation rate target, meaning that while medium term inflation has to return to target, momentary deviations would not be a matter of concern.

Currently NZD/USD trades at 0.6604 levels, above its previous close of 0.6512.

"We do not doubt that the RBNZ would take action again if necessary should an appreciating NZD endanger the return to the inflation target and expect lower NZD-USD levels medium term. At least short term Wheeler might well delay the depreciation of NZD though," says Commerzbank in a research note.