By Will Peters

New Zealand dollar exchange rates are today seeing heightened volatility. The NZ Dollar (NZD) initially skyrocketed from its two week low at 0.8210 all the way up to 0.8339 against the US dollar (USD) which fed through into the crosses. Forecasts for the New Zealand dollar remain mixed with positive long-term indicators being clouded by short-term pressures.

The NZ Dollar rose after reports showed an accelerating inflation, indicating that the central bank might increase interest rates in the near term.

The release is not reflected in today's day-on-day changes as they were released overnight, before Monday's close. Today's exchange rate numbers show the gains have stalled and the NZ dollar is consolidating.

NZ dollar exchange rates today

The pound sterling to New Zealand dollar exchange rate is trading 0.18 pct higher at 1.9781.The New Zealand dollar to US dollar exchange rate is 0.25 pct lower at 0.8306The Australian dollar to NZ dollar exchange rate is 0.09 pct lower at 1.0578.Note: Our NZD quotes are taken from the wholesale spot markets. Your bank will charge a spread at their discretion when passing on a retail rate. However, an independent FX provider is so well placed on the market that they are able to deliver you up to 5% more currency. Please learn more here.

New Zealand dollar exchange rate action over the past 24 hours

Last night, New Zealand price data revealed inflation rose 0.1%q/q, beating expectations of a quarterly drop of 0.1%. The RBNZ have already revealed their plans to raise interest rates this year, and higher inflation supports their case to do so.

"New Zealand remains one of the closest watched currencies this year. Recent data from New Zealand would seem to warrant a tightening of monetary policy but there is the possibility that, like other higher-beta currency controlling central banks, the recent NZD strength will preclude the central bank from further encouraging investment into it," says Jak May at Currency Index.

Outlook for the pound sterling vs New Zealand dollar (GBP/NZD)

While Friday’s UK retail sales numbers were much stronger than expected, it is no big surprise that they haven’t led to more sustained GBP gains, as the Q4 retail sales outcome was still only a rise of 0.4%, and there is no necessary implication for Q4 GDP.

Even so, analysts at Lloyds Bank Research still see some value in GBP on a dip vs the likes of the New Zealand dollar. "The strength of UK growth and the declining trend in unemployment does suggest the possibility of a steady widening of yield spreads in favour of the GBP," say Lloyds Bank.

There will be interest in today’s CBI industrial trends survey for any indications on the momentum of the economy in January, but the focus will mainly be on tomorrow’s labour market data.

"A dip in the unemployment rate to 7.3% would provide further support to the GBP bull case. We would not expect anything from the MPC minutes to discourage this at this stage," say Lloyds.

Forecasts for the key NZ dollar exchange rates today

Orestis Aristides at Easy Forex is bullish on the New Zealand dollar's outlook:

"Options traders may consider constructing a Bull call Spread on NZD/USD and benefit from any further upside. A Bull Call Spread can be constructed by purchasing an in-the-money Call and sell out an out- of-the-money Call on NZD/USD."

"The NZD/USD dropped consistently in the latter half of last week, though traders look like they may be turning over a new leaf as we roll into a new week. Rates just carved out a large 4hr Bullish Pin Candle off Monthly Pivot support at .8225, potentially marking a near-term bottom and pointing to a possible bounce toward the .8300 round handle in today’s North American session. More conservative traders may want to consider buying intraday dips back into the lower.8200s as the day develops," says Matthew Weller at GFT.

"NZD/USD rebounded strongly yesterday, after testing 0.8210-0.8215 support level at the 38.2 retracement level for 0.7682-0.8543 wave. The strong rebound threatens for further upside, however as long as below 0.8415 main resistance level, the upside seen limited. We move to the sidelines for now awaiting confirmation," says a note from ICN Financial who indicate they are neutral on NZD/USD.