NZD Jobs Report Talking Points:
- New Zealand unemployment rate rises to 4.2% vs expectations of 4.1%
- The higher unemployment prompted an increased probability for a rate cut at next week’s RBNZ meeting, with overnight swaps currently pricing a 62.3% chance for a rate cut, up from 54.4% prior to the report crossing the wires
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The unemployment rate for New Zealand rose to 4.2% versus expectations of 4.1%, prompting the New Zealand dollar lower as markets see a higher chance for a rate cut at next week’s RBNZ meeting to provide further stimulus to the economy. Pricing in overnight swaps increased to 62.3% from 54.4% on the data, reflecting the weakening labor market and the RBNZ’s objective to sustain a healthy jobs market.
NZDUSD (5-Min Chart)
Currently the stance of the RBNZ remains ready to accommodate should there be further need, evidenced by their latest policy statement where they kept rates steady. Today, however, the New Zealand Dollar is reflecting the increased probability for more easing with NZDUSD dropping as low as 0.6369 as the report crossed the wires.
Beyond the unemployment rate rising above expectations, average hourly earnings dropped to 0.6%, down from 1.1% in the previous month and missing consensus expectations of 1.0%. The drop in hourly earnings could signal further slack in the labor market as pressure to compete for workers normally lifts wages.
--Written by Thomas Westwater, Intern Analyst for DailyFX.com
Contact and follow Thomas on Twitter @FxWestwater
DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.
