New Zealand sees substantial job market growth
New Zealand is currently the envy of many countries, as Prime Minister, Jacinda Ardern, declared last year that the country was free of coronavirus and lifted all restrictions. The improved health of the country has generated positive movements within New Zealand’s economy, particularly the job market which has now surpassed pre-pandemic levels.
New Zealand jobs website, Seek, has confirmed a 19% increase in job vacancies during Q4 of 2020. The most active sectors within New Zealand include IT and communications, manufacturing, transport & logistics and trades & services.
The rise in job vacancies follows news of New Zealand’s significant economic growth experienced during Q3 of 2020. New Zealand Finance Minister, Grant Robertson, attributed the economic success as a result of imposing stringent restrictions early on during the Covid-19 pandemic.
Key Canadian data expected
We expect news from US neighbours, Canada next week, as it’s anticipated that the Bank of Canada will make a ‘micro-cut’ to interest rates, edging closer to zero per cent. The news of interest rate cuts comes as Canada looks to tighten restrictions amid a second wave of coronavirus.
As a commodity currency, volatility in the commodities markets and strained US-Canada relationship could take its toll on Canadian exports to the US – a key market for Canada and an important source of growth – and in turn, could affect the Canadian dollar (CAD).
New Zealand at the mercy of China’s success – or failure…
Although New Zealand’s economy is currently thriving, the success of the country is heavily influenced economically by the strength of the Chinese and Australian economies, including Australian imports of New Zealand products. China is Australia’s largest export market, so their economic fortunes and currencies are inextricably linked. That, in turn, affects any wider export and import market trends in the Antipodes. Annual Gross Domestic Product (GDP) for New Zealand also grew by 0.4%, exceeding expectations of a 1.3% contraction.
As it stands, it’s forecast that China’s economy will grow by 8.4% in 2021 with interest rates looking to remain steady. Whilst China saw a slump in its economy during Q1 of 2020 when coronavirus first emerged, economic growth has climbed steadily ever since.
GBP/EUR – British pound (GBP) strengthening against euro (EUR)
Post-Brexit, the British pound (GBP) is slowly trending higher against the euro (EUR) as demand for UK assets appears to be increasing appetite for Sterling. It’s also thought that Bank of England (BoE) Governor, Andrew Bailey’s, comments indicating that the BoE will steer away from negative interest rates has also helped matters. At the time of writing the British pound to euro (GBP/EUR) exchange rate stands at EUR 1.13.
The decline in the euro (EUR) is largely down to increasing cases of COVID-19, which has particularly impacted Germany, the largest economy in the Eurozone. Data confirms that Germany’s economy contracted by 5% during 2020, following a year of economic turbulence as a result of coronavirus.
British pound (GBP) continues to edge higher against US dollar (USD)
The British pound to US dollar (GBP/USD) exchange rate currently stands at USD 1.37 as sentiment towards the UK economy continues to improve thanks to vaccine progressions. It’s been confirmed that 6,221,850 people have now received the first dose of a COVID vaccine in the UK.
US Dollar (USD) sentiment has faltered this week given the impeachment of former US President, Donald Trump following right wing protestors storming the Capitol last week.
The British pound (GBP) is also seeing improvement against the Australian dollar (AUD) as analysts indicate that the Aussie may not perform as strongly in 2021 due to potential quantitative easing. However, the Australian dollar is likely to still see moderate growth, given its strong ties with the Chinese economy. The British pound to Australian dollar (GBP/AUD) exchange rate currently stands at AUD 1.78, with optimism in economic recovery buoying market sentiment.