- NZD/USD catches aggressive bids in reaction to the upbeat employment details.
- The momentum gets an additional boost after the release of Chinese trade data.
- A positive risk tone also benefits the Kiwi, though a stronger USD might cap gains.
The NZD/USD pair builds on its strong intraday gains and climbs to over a two-week high heading into the European session on Wednesday, with bulls now building on the momentum beyond the 0.6000 psychological mark.
The New Zealand Dollar (NZD) rallied hard following the release of better-than-expected employment details, showing that the number of employed people increased by 0.4% in the second quarter. The reading was better than the 0.2% decline registered in the previous quarter and market expectations. Adding to this, the unemployment rate rose less than consensus estimates, to 4.6% from 4.4% during the January-March quarter. The upbeat data lowered the likelihood of a rate cut by the Reserve Bank of New Zealand (RBNZ) and prompted aggressive short-covering around the NZD/USD pair.
Meanwhile, Chinese trade data released this Wednesday showed an unexpected surge in imports, by the 7.2% YoY rate in July, which suggested that domestic demand remains resilient. This, along with a generally positive risk tone, pushes the NZD/USD pair higher for the second successive day. It, however, remains to be seen if bulls can capitalize on the move amid a goodish pickup in the US Dollar (USD) demand, bolstered by a further recovery in the US Treasury bond yields. Moreover, geopolitical risks could cap the optimism in the markets and act as a headwind for the NZD/USD pair.
Moving ahead, there isn't any relevant market-moving economic data due for release from the US on Wednesday. Hence, the US bond yield will play a key role in influencing the USD price dynamics. Apart from this, the broader risk sentiment might contribute to providing some impetus to the NZD/USD pair ahead of the New Zealand second quarter inflation expectations data, due for release during the Asian session on Thursday.
Economic Indicator
Employment Change
The Employment Change, released by Statistics New Zealand, is a measure of the change in the number of employed people in New Zealand. Generally speaking, a rise in this indicator has positive implications for consumer spending and is stimulative of economic growth. A higher reading is seen as bullish for the New Zealand Dollar (NZD), while a lower reading is seen as bearish.
Read more.Last release: Tue Aug 06, 2024 22:45
Frequency: Quarterly
Actual: 0.4%
Consensus: -0.2%
Previous: -0.2%
Source: Stats NZ
Statistics New Zealand releases employment data on a quarterly basis. The statistics shed a light on New Zealand’s labor market, including unemployment and employment rates, demand for labor and changes in wages and salaries. These employment indicators tend to have an impact on the country’s inflation and Reserve Bank of New Zealand’s (RBNZ) interest rate decision, eventually affecting the NZD. A better-than-expected print could turn out to be NZD bullish.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.