Forex Marketz Daily Forex News – Fully Markets Update
The New Zealand dollar, also known as the Kiwi (NZD/USD) fell against its major G 20 Forex trading partners this morning, after a rather disappointing second quarter (Q2) jobs report crossed the news wires.
There was some good news for the New Zealand labor force, and we will start there. The unemployment rate fell to 4.8 percent from 4.9 percent. This was as expected. This is also the lowest reading since the fourth quarter of 2008.
Now for the bad news, which effected the Kiwi dollar more. Year-over-year, the number of jobs grew by 3.1 percent. This was way below the expected growth of 4.1 percent. This was the slowest rate of growth since the first quarter (Q1) of 2016. Quarterly readings for, for labor growth, also fell short of estimates. They contracted by 0.2 percent instead of growing 0.7 percent, quarter on quarter. This was the first contraction since the third quarter of 2015.
The Kiwi falls as the RBNZ will likely Stand Firm
The New Zealand labor force had enjoyed five consecutive quarters of growth. The island nation’s labor force participation moved lower to 70.0 percent from 70.6 percent. This explains why the unemployment rate fell amidst weak jobs growth. It implies that discouraged workers left the market.
As a result of this weaker than expected jobs report, overnight index swaps pricing in at least one rate hike, from the Reserve Bank of New Zealand (RBNZ), over the next 12 months. Today’s poor employment data seemed to have reduce some of the hawkish expectations investors had. The front end two year New Zealand government bond yields fell as well, putting pressure on the Kiwi dollar.
