NZD/USD Rebound To Fizzle On Soft New Zealand Employment Report

– New Zealand Employment Growth to Slow for Second Straight Quarter.

– Average Hourly Earnings to Rebound After Contracting for First Time Since 2008.

Trading the News: New Zealand Employment

New Zealand’s 4Q Employment report may generate a mixed market reaction as job growth is projected to slow for the second consecutive quarter, but signs of stronger job growth may fuel the near-term rebound in NZD/USD as it dampens bets for additional monetary support.

Why Is This Event Important:

A pickup in household earnings may encourage Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler to alter the monetary policy outlook ahead of his departure in September as the central bank head anticipates inflation ‘to return to the midpoint of the target band over the medium term.’ However, another batch of lackluster data may force the RBNZ to preserve the record-low cash rate throughout 2017, and Governor Wheeler may continue to discourage bets for an imminent rate-hike as the ‘growth outlook remains positive, supported by on-going accommodative monetary policy.’

Impact that the New Zealand Employment report has had on NZD/USD during the previous release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

2016

01/31/2017 21:45 GMT

6.1%

5.8%

-44

-103

4Q 2016 New Zealand Employment

NZD/USD 15-Minute

New Zealand Employment increased 5.8% per annum during the last three-months of 2016, while the jobless rate unexpectedly climbed to an annualized 5.2% from 4.9% in the previous quarter as the labor force participation rate widened to 70.5% from 70.1% during the same period. At the same time, private wages excluding overtime increased another 0.4% amid forecasts for a 0.5% print, while average hourly earnings declined 0.3% in the fourth quarter to mark the first decline since 2008. The New Zealand dollar lost ground following the dismal report, with NZD/USD slipping below the 0.7300 handle to end the day at 0.7241.