The New Zealand dollar broke records when it surpassed the Australian dollar due to weak jobs data in Australia and differences in interest rate outlooks between neighbour countries.

The Kiwi dollar climbed as high as 94.80 Australian cents as it traded against the Aussie at 94.72 cents on Jan 16. It is the highest climb of the Kiwi dollar in 8 years. The local currency soared to 83.44 U.S. cents from 83.29 cents as of the same day.

Figures released by the Australian government revealed a decline in full-time jobs in December which gave analysts reason to revise their expectations. The Reserve Bank of Australia may cut interest rates, while New Zealand's central bank prepares to increase rates.

While New Zealand's economy enjoys strong growth, inflation pressures may creep in. Michael Johnston, a senior dealer at HiFX Auckland, said that New Zealand will be the first nation to increase interest rates. Mr Johnston believes this is going to happen soon, but the Australian jobs data may cause pressure on the Kiwi/Aussie exchange since the RBA considers another rate cut.

New Zealand economic boom drive currency

New Zealand's economic boom could drive the currency to new heights. HSBC considers the rebuilding of earthquake-damaged Christchurch as one of the driving forces of New Zealand's economy. The bank cited how the last decade's resources boom spurred the Australian economy.

In a report, HSBC Bank Australia's Adam Richardson and Paul Bioxham said New Zealand is on track to have a strong economy in 2014 with the country predicted to outperform all other OECD economies, except Mexico, Israel and Chile. HSBC has predicted New Zealand's GDP to grow 3.4 per cent in 2014 from 2.8 per cent in 2013. The HSBC report suggested the New Zealand dollar is set to outperform the Australian dollar for the first time in four decades.

According to the Reserve Bank of New Zealand, the reconstruction in Canterbury is estimated at NZ$40 billion in total. The amount is equivalent to 20 per cent of the country's annual GDP. Based on the reconstruction figures, HSBC economists said the scale of activity is similar to Australia's resource investment boom which had a great impact in the country's economy.