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NZD/USD to Target Fresh Highs on Strong New Zealand Employment

NZD/USD to Target Fresh Highs on Strong New Zealand Employment

David Song, Gregory Marks,

- NZ Employment to Rise 0.6%, Jobless Rate to Narrow to 5.8% (Lowest Since 1Q 2009)

- Job Growth has Exceeded Market Forecast During the Last Four-Straight Quarter

Trading the News: New Zealand Employment Change

New Zealand Employment is expected to increase another 0.6% during the first-quarter, and a marked pickup in job growth may generate fresh 2014 highs in the NZD/USD as it puts increased pressure on the Reserve Bank of New Zealand (RBNZ) to normalize monetary policy further in the coming months.

What’s Expected:

NZD/USD Employment

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Why Is This Event Important:

RBNZ Governor Graeme Wheeler may continue to deliver a series of rate hikes in the second-half of the year as the stronger recovery raises the outlook for growth and inflation, and the bullish sentiment surrounding the NZD/USD may gather pace throughout 2014 as the Federal Reserve remains reluctant to move away from its highly accommodative policy stance.

Expectations: Bullish Argument/Scenario




Trade Balance (MAR)



Performance Services Index (MAR)



Business Purchasing Manager Index Manufacturing (MAR)



The pickup in global trade paired with the ongoing expansion in business outputs may generate a meaningful jump in employment, and a positive development may continue to prompt higher highs in the NZD/USD as it heightens bets for another rate hike at the RBNZ’s June 11 meeting.

Risk: Bearish Argument/Scenario




ANZ Business Confidence (APR)



Card Spending- Retail (MoM) (MAR)



Retail Sales ex Inflation (QoQ) (4Q)



However, firms may scale back on hiring amid the slowdown in household consumption along with the decline in business sentiment, and a dismal employment print may lead to a near-term correction in the NZD/USD as it drags on interest rate expectations.

How To Trade This Event Risk(Video)

Bullish NZD Trade: Employment Rises 0.6% or Greater

  • Need green, five-minute candle following the release for a potential bullish NZDUSD trade
  • If market reaction favors a long trade, buy NZD/USD with two separate position
  • Set stop at the near-by swing low/reasonable distance from entry; need at least 1:1 risk-to-reward
  • Move stop to breakeven on remaining position once initial target is met, set reasonable limit

Bearish NZD Trade: New Zealand Job Growth Disappoints

  • Need red, five-minute candle to consider a short New Zealand dollar position
  • Carry out the same setup as the bullish NZD/USD trade, just in the opposite direction

Potential Price Targets For The Release

Join DailyFX on Demand to Cover Current NZD/USD Trade Setups


NZD/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • RSI Breaks Out of Bearish Momentum; Eyes 2011 High (0.8841)
  • Interim Resistance: 0.8750 (78.6% expansion) to 0.8780 (38.2% expansion)
  • Interim Support: 0.8430 (23.6% retracement) to 0.8460 (38.2% expansion)

Impact that New Zealand Employment has had on NZD/USD During the Last Release


Data Released



Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

4Q 2013

02/04/2014 21:45 GMT





4Q 2013 New Zealand Employment


The New Zealand Dollar saw a slight uptick following employment data that came in better than expected, but follow through was incredibly limited. The pair remained essentially flat throughout the trading day. With rate expectations fully priced in and with the last inflation figure missing estimates to the downside, any negative data out of New Zealand could help keep our former high in place and so long that we see a relatively strong base in the Dow Jones FXCM USDollar Index.

Read More:

Price & Time: Do or Die for the Euro

USD/JPY Looks Towards Yearly Low; EUR/USD Breakout Waits for ECB

--- Written by David Song, Currency Analyst

To contact David, e-mail Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

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