The New Zealand dollar looked to end the week with substantial gains as investors forecast a rise in local interest rates is just around the corner.

At the time of writing, the kiwi dollar stood at $0.7048, following 1% gains for the week to date. The upcoming targets are $0.7088 reached earlier this week, as well as the July high of $0.7105.

In addition, the Australian dollar was up 0.5% for the week at $0.7387, falling from its $0.7426 high.

The New Zealand dollar has been bolstered by robust jobs data all but securing forecasts of a rate hike by the Reserve Bank of New Zealand on 18 August, the first since 2014.

As it stands, the cash rate is at an all-time record low of 0.25%, following a cut of 75 basis points early in 2020, Reuters reports.

This would also be the first rate rise by any developed country since the start of the coronavirus crisis, and highlights the strength of New Zealand’s economy and labour market. Indeed, unemployment has fallen to 4%, two years ahead of the central bank’s forecasts.

Furthermore, the country also stands out for its success in eradicating the virus, yet low vaccination levels mean it is susceptible to an outbreak.

“The RBNZ’s assessment of conditions could change if Delta risks manifest as a drop in export demand, or if there is a related softening in local confidence and activity,” stated Westpac senior economist Satish Ranchhod.

“However, given the strength of economic activity and related lift in inflation pressures, we continue to expect that the RBNZ will hike the cash rate by 25bps at its August meeting, with follow up hikes in October and November.”

However, this has mostly been priced in by the markets, with two-year swap rates rising 16 basis points on the week at 1.1975%.