The Kiwi dollar remained range-bound against the greenback yesterday following the release of upbeat economic data from both the US and New Zealand. While New Zealand’s employment growth data for the September quarter exceeded expectations, the US non-farm payroll data for October was overwhelmingly positive.
The Fed also delivered another 75bps rate hike yesterday. However, the dovish statement accompanied by the rate hike enabled the New Zealand dollar to hold ground. Overall, the NZD/USD pair traded in a narrow range (excluding the spike caused by the rate hike) of between 0.5837 and 0.5885 in the past 24 hours.
According to the data published by Statistics New Zealand, the country’s employment rose by 1.30% q-o-q in the September 2022 quarter after remaining unchanged in the June 2022 quarter and exceeding forecasts of 0.5% growth.
At the end of the September quarter, the number of employed people stood at 2,853,000, up 35,000 from the prior quarter. While the manufacturing industry added 17,100 jobs, the public administration and safety industry recorded an addition of 16,000 jobs. However, the education and training sector lost 16,500 jobs.
Correspondingly, the unemployment rate stood at 3.30% in the third quarter, unchanged from the prior quarter and a notch higher than the 3.20% jobless rate anticipated by economists.
The number of unemployed people was 97,000 at the end of the September 2022 quarter, an increase of 1,000 from the prior quarter. However, the underutilization rate inched lower to 9% from 9.20%. The number of underutilized people stood at 273,000 at the end of the September 2022 quarter. Also, the employment rate grew to 69.30%, compared with 68.60%.
The seasonally adjusted labor force participation rate rose to 71.7 percent, up from 70.9 percent last quarter. Furthermore, the employment rate grew to 69.30% from 68.60%.
According to the data published by Automatic Data Processing, the US non-farm payrolls increased by 239,000 in October, following an addition of 192,000 jobs in the prior month, and pleased the market, which was expecting only 178,000 job additions.
However, the job creation was not broad-based. The services-providing sector added 247,000 jobs. Specifically, the leisure/hospitality industry recorded an increase of 210,000 jobs. The trade, transportation/utilities sectors added 84,000 jobs.
On the contrary, the information sector lost 17,000 jobs. Likewise, the professional/business sector recorded a loss of 14,000 jobs. Financial activities reported a loss of 10,000 jobs. The education/health sector shed 5,000 jobs.
The goods industry recorded an erasure of 8,000 jobs. In particular, manufacturing jobs fell by 20,000.
Later in the US session, the US Fed announced their fourth consecutive 75-bps rate hike while indicating their rigorous efforts to contain inflation could be reaching their final stage. Following the Fed’s decision, which was approved unanimously by the FOMC (Federal Open Market Committee) members, the benchmark interest rate rose to a range of 3.75% to 4%, reflecting the highest level in 14 years.
Fed Chair Powell also stated that it will take a while for inflation to decrease, and that will eventually pave the way for a slower economic expansion. Furthermore, the Fed indicated that future rate hikes would likely be in modest increments. This statement turned the US dollar weak against its counterparts, including the Kiwi dollar.
The slightly dovish Fed statement is expected to keep the NZD/USD pair range bound with a slight bullish bias in the short term.
The historical price chart indicates that the NZD/USD pair is rising after testing the support at 0.5790. The next resistance is anticipated only near 0.6003. Additionally, the stochastic indicator is in the oversold region. Therefore, we anticipate the NZD/USD pair to begin an uptrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
