Release: NZ Employment Change (4Q)
Consensus Forecast: 0.4%
Previous: 0.2%
Release: NZ Unemployment Rate (4Q)
Consensus Forecast: 6.5%
Previous: 6.6%
Date/Time: 2/8/12 4:45 PM ET (21:45 GMT)
Will Kiwi Feel the Impact from Employment Data:
New Zealand releases its employment report for the fourth quarter in the late afternoon in New York’s Wednesday trading session or Thursday morning in New Zealand.
The expectation is for a 0.4% increase in employment which should lower the unemployment rate down to 6.5% from 6.6%.
That would be a positive development and that would continue to expand on the job gains in the New Zealand economy we have seen since the middle of 2009.
That bodes well for the strength of the New Zealand kiwi, though the NZD/USD pair is at an interesting level, which we will look at shortly.
The unemployment rate meanwhile has stuck 20 range between six and 7% during the last two years and expectation is for a slight improvement in the fourth quarter.
Implication on RBNZ and Kiwi
In the latest RBA see rate decision the governor said it was prudent keep the official cash rate unchanged amid uncertain global economic conditions and moderate strength of local demand. Been really offer a timetable in terms of for how long that rate would remain on hold, and the argument is that the bank is in a neutral bias. Strengthening labor market would create the conditions for which the RBA see would feel more comfortable about raising rates sometime in 2012.
Expectations for the RBNZ rates 12 months from now turned slightly positive in February according to overnight index swaps markets. A run of stronger-than-expected data from global manufacturing help to bolster risk sentiment and has helped to push higher-yielding commodity currencies higher during the last month and a half.
The New Zealand dollar has been on a nearly uninterrupted rally against the USD over the last month and a half and recently cleared the 61.8% retracement of its downswing from early August to late November of last year at the 0.8280 level.
While the kiwi will continue to predominately be pushed around by general risk sentiment the employment data can have an important impact now that the daily RSI reading has moved into and remained in overbought territory and we have a little bit of consolidation over the last five trading sessions.
If the employment situation comes in weaker than expected that could be a catalyst for a short-term correction especially if the pair for managed to push below 0.8280. That is because slower job growth would push out further into the future when the RBNZ would raise interest rates. A positive jobs report can help keep the momentum in the rally here, other risk events held equal, and could mean the pair targets the highs set in late August next at 0.8570.
There is plenty of other key risk events tomorrow including central bank decisions from the Bank of England and European Central Bank, as well as overnight inflation data from China, plus the continuing monitoring of the Greek negotiations regarding their bailout and the debt restructuring. therefore the release may get buried as we move into the Europeans Thursday session whoever it still creates an interesting back to for the pair.
- Nick Nasad is the Chief Market Analyst at FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.
