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New Zealand dollar shrugs after soft jobs report

The New Zealand dollar remained stable on Thursday after falling sharply by 1.5% a day earlier. NZD/USD is trading 0.08% higher on the day at 0.5890 at the time of writing.

Employment in New Zealand is declining

The New Zealand labor market is showing signs of cracks. Employment fell 0.2% quarter-on-quarter in the fourth quarter, lower than the 0.4% increase in the fourth quarter of 2023 and lower than the market estimate of 0.3%. This marked the second decline in three months. The unemployment rate rose to 4.3%, up from 4% in the fourth quarter and above the market estimate of 4.3%. Despite the weakness in the labor market, private sector wage growth remained high at 3.8% annually.

How will the Reserve Bank of New Zealand respond to the jobs report? The RBNZ has kept the cash rate at 5.50% six times in a row, sticking to its “higher for longer” stance. The inflation rate fell from 4.7% to 4% in the first quarter, but remains above the upper limit of the target range of 1% to 3%. RBNZ policymakers will keep a close eye on key data, especially second-quarter inflation, which will be released in July. Three of the four major banks expect a rate cut in the fourth quarter, while a fourth expects a cut in the first quarter of 2025.

New Zealand’s ANZ business confidence index fell to 14.9 in April, down from 22.9 a month earlier. Business confidence fell across all sectors and business activity declined from a year ago, with retail and manufacturing sectors particularly hard hit.

NZD/USD Technical

  • There is resistance at 0.5918 and 0.5951
  • 0.5855 and 0.5822 provide support

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