Early Wednesday in Asia, at 22:45 GMT Tuesday world over, the global market sees the first quarter 2021 employment data from the Statistics New Zealand. Given the covid resurgence in the Asia-Pacific, coupled with the recently mixed comments from the Reserve Bank of New Zealand’s (RBNZ) bi-annual Financial Stability Review (FSR), NZD/USD traders are divided over the data and make it the key for immediate direction.
Market consensus suggests no change in the headlines Unemployment Rate of 4.9% while expecting 0.2% Employment Change versus 0.6%. Further, the Participation Rate may inch up from 70.2% to 70.3%, per forecasts.
Ahead of the data, TD Securities said,
We pencil in the Q1 unemployment rate at 4.8%, more optimistic than the RBNZ’s Feb MPS (5.0%) and market forecast (4.9%). We look for employment growth to come in at 0.6% q/q (Q4:0.6%) as Stats NZ’s monthly employment indicator shows higher filled jobs at the end of Q1. Business surveys have also pointed to difficulties in finding skilled labor and coupled with the minimum wage hike could add to further wage pressures in the private sector (market consensus: 0.5% q/q). Downside risk to our employment forecast could come from a slowdown in economic activity as seen from the weaker-than-expected Q4 GDP print.
NZD/USD recently ignored the RBNZ FSR as the bi-annual statement flashed mixed signals while staying cautiously optimistic. It should be noted that the risk-off mood and the pre-data caution also weigh on the quote of late.
Given the upbeat forecasts and mixed comments from the RBNZ FSR, the data will be important for NZD/USD sellers as virus conditions worsened in Q1, which in turn challenges the optimists. As a result, the pair traders need to closely observe the data, not only the headline figures, to get a clear direction. Herein, the Participation Rate will be the key to follow.
On the chart, NZD/USD sellers battle 21-day and 50-day SMA convergence, near 0.7150-45, to keep the reins, an upward sloping trend line from April 01, around 0.7115, also acts as the key support to watch during the quote’s further weakness. Alternatively, the 0.7200 threshold guards the kiwi pair’s short-term recovery moves.
The quarterly report on New Zealand unemployment rate and employment change is being released by the Statistics New Zealand.
The unemployment rate is the number of unemployed workers divided by the total civilian labor force. If the rate is up, it indicates a lack of expansion within the New Zealand labor market. As a result, a rise leads to weaken the New Zealand economy. A decrease of the figure is seen as positive (or bullish) for the NZD, while an increase is seen as negative (or bearish).
On the other hand, employment change is a measure of the change in the number of employed people in New Zealand. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. A high reading is seen as positive (or bullish) for the NZ dollar, while a low reading is seen as negative (or bearish).