THE TAKEAWAY: New Zealand employment deteriorates, Japan industry fades while Aussie employment gains > Dovish New Zealand, hawkish Aussie employment prompt AUDNZD move
The New Zealand Dollar traded sharply lower versus its major counterparts as disappointing employment data came across the newswires prompting Forex traders to unwind their high yielding positions in the kiwi on speculation the RBNZ may issue a rate reduction effectively diminishing the currencies' most attractive feature. The unemployment rate in New Zealand increased to 7.3 percent in the third quarter up from 6.8 percent in the second quarter while the participation rate remained at 68.4 percent. Traders are likely to focus on trade balance figures on the 26th and 2-year inflation expectations on the 27th to close out November.
Meanwhile in Japan machine orders fell by 4.3 percent in September marking the second consecutive month of fading industrial activity while the trade deficit narrowed to -471.3 billion yen in September down from -644.5 billion the prior month. BoJ’s Shirakawa has recently noted a weakening fundamental outlook and a high exchange rate as catalysts behind the central bank’s “powerful” monetary easing operations. It’s unclear as to whether FX traders will abandon the yen’s haven status even though policy officials have upped their stimulus efforts.
The Australian Dollar found support as the Aussie economy added 10,700 new jobs in October, but failed to drag the unemployment rate down from 5.4 percent. 18,700 workers found full time work where 8,000 part timers lost their pay. The positive employment figures should bode well for hawkish RBA commentary and Forex traders appeared to have traded along the same lines.
AUD/NZD, 15 Minute Chart