– NZ Employment to Rise 0.6%, Jobless Rate to Slip to 6.0% (Lowest Since 2Q 2009)
– Job Growth has Topped Market Forecast During the Last Three-Straight Quarter
Trading the News: New Zealand Employment Change
Job growth in New Zealand is expected to expand another 0.6% during the third-quarter, and a marked pickup in employment may spark a near-term rally in the NZDUSD as it puts increased pressure on the Reserve Bank of New Zealand (RBNZ) to normalize monetary policy.
What’s Expected:
Time of release: 02/04/2014 21:45 GMT, 16:45 EST
Primary Pair Impact: NZDUSD
Expected: 0.6%
Previous: 1.2%
DailyFX Forecast: 0.6% to 1.0%
Why Is This Event Important:
There’s growing bets that the RBNZ will raise the benchmark interest rate at the March 12 meeting as the region faces a heightening risk for an asset-bubble, and Governor Graeme Wheeler may introduce a series of rate hikes in 2014 as the economic recovery continues to gather pace.
Expectations: Bullish Argument/Scenario
Release
Expected
Actual
Trade Balance (DEC)
500M
523M
Building Permits (MoM) (DEC)
-5.0%
7.6%
Gross Domestic Product s.a. (QoQ) (3Q)
1.1%
1.4%
The stronger-than-expected recovery along with the ongoing pickup in housing may prompt another marked increase in job growth, and a positive print may help the NZDUSD to retrace the decline from the previous month as it raises the scope of seeing higher borrowing costs in the New Zealand economy.
Risk: Bearish Argument/Scenario
Release
Expected
Actual
ANZ Job Advertisements (MoM) (DEC)
—
-0.7%
Consumer Price Index (YoY) (4Q)
1.5%
1.6%
Retail Sales ex Inflation (QoQ) (3Q)
0.9%
0.3%
Nevertheless, higher costs paired with the slowdown in private consumption may drag on hiring, and a dismal print may trigger further declines in the exchange rate as market participants scale back bets of seeing a rate hike over the coming months.
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 NZDUSD 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 NZDUSD trade, just in the opposite direction
Potential Price Targets For The Release
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NZDUSD Daily
Chart – Created Using FXCM Marketscope 2.0
Retains Upward Trend from 2009; Bullish RSI Break Highlights Topside Targets
Interim Resistance: 0.8430 (23.6% retracement) to 0.8465 (38.2% expansion)
Interim Support: 0.8030 (61.8% retracement) to 0.8050 Pivot
Impact that New Zealand Employment has had on NZDDuring the Last Release
Period
Data Released
Estimate
Actual
Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
3Q 2013
11/05/2013 21:45 GMT
0.5%
1.2%
+33
+48
3Q 2013 New Zealand Employment
New Zealand Employment increased another 1.2% in the second-quarter, with the jobless rate narrowing to 6.2% from 6.4%, and the stronger-than-expected recovery may lead the RBNZ to adopt a more hawkish tone for monetary policy as it raises the threat of an asset-bubble. The New Zealand dollar tracked higher following the print, with the NZDUSD climbing above the 0.8350 region, and the higher-yielding currency continued to gain ground throughout the day as the pair closed at 0.8575.
— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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Source: Daily fx
