Nzdusd rises 0.62% as New Zealand’s labor market shows mixed signals

NZDUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.62%	37 Pips
Week to-date	0.95%	56.7 Pips
May	1.12%	66.4 Pips

Upcoming key events (London Time)

Tue 11:45 PM NZD Employment Change
Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)

What happened lately

New Zealand’s labor market data for the first quarter (Q1) of the year presents a mixed economic picture. The Employment Change showed a slight recovery, increasing by 0.1%, a bounce back from the -0.1% figure observed in the fourth quarter (Q4). This indicates a modest expansion in employment opportunities in the country. However, the unemployment rate remained unchanged at 5.1%, suggesting a stable job market where employment growth is being met with an equal increase in the labor force. Meanwhile, the Labour Force Participation Rate experienced a minor decline to 70.8% from 71%, showing a slight reduction in the percentage of the working-age population that is engaged in the labor market. Furthermore, New Zealand’s Labour Cost Index (LCI), which represents wage inflation, decreased to 0.4% from 0.6% in Q4. This suggests a slowdown in wage growth, potentially impacting consumer spending power.

The data will likely exert a moderate influence on the NZDUSD pair due to its direct connection to the New Zealand’s economy and employment landscape. The modest rise in employment is a positive signal, hinting at economic recovery. Nevertheless, the steady unemployment rate and decreased Labor Force Participation Rate might temper market enthusiasm. Additionally, the declining Labour Cost Index suggests weak inflationary pressures from wages, potentially delaying any considerations for a rate hike from the Reserve Bank of New Zealand. These mixed signals could lead to cautious optimism among investors, keeping a tight watch on the upcoming US Federal Reserve Interest Rate Decision for further directional cues. The anticipation of a rate decision might lead to increased short-term volatility in the NZDUSD as traders position themselves for potential interest rate differentials between the US and New Zealand. The subtle positive trend in employment could lend some support to the NZD, but broader macroeconomic factors and upcoming events, particularly the US interest rate decision, will remain pivotal in defining the NZDUSD trajectory.

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What can we expect from NZDUSD today?

NZDUSD on Tuesday rose 0.62% to 0.60010. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for NZDUSD looks bullish as the pair ended higher after Tuesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 0.60282 with break above could target R2 at 0.60554 or figure level area. While towards the downside, we are looking at daily low of 0.59434 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.60130 may suggest continuation after recent positive movement.

For the week to-date, take note that NZDUSD is bullish as the pair continued to trade higher and is up by 0.95% over the past few days.

Key levels to watch out:

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