The greenback fell against the Kiwi dollar yesterday following the US Fed’s decision to leave the benchmark interest rates unchanged at 5.50%. The Fed also avoided issuing hawkish statements and made a plain statement indicating its intention to track US economic data. This enabled the NZD/USD pair to rally from a low of 0.5825 to a high of 0.5926 in the past 24 hours.
According to Statistics New Zealand, the country’s employment declined 0.20% q-o-q in the September quarter following an addition of 1% in the previous quarter and missed forecasts of a 0.40% increase.
The underutilization rate rose to 10.40% in 3Q 2023 from 9.90% in 2Q 2023. Likewise, the employment rate inched down to 69.10% in the September quarter from 69.80% in the June quarter. Overall, the labor force participation rate fell to 72% in Q3 2023 from 72.4%, the highest level recorded since 1986, in Q2 2023.
The unemployment rate grew to 3.90% in the September quarter from 3.60% in the earlier quarter. The reported figure, the highest since the June 2021 quarter, was in line with economists’ estimates.
In the year to the September 2023 quarter, salary and wages grew by 4.30%. Additionally, hourly earnings rose to N$40.40.
According to the data published by Automatic Data Processing, Inc., the US non-farm (private sector) payroll rose by 113,000 in October following an increase of 89,000 jobs in the previous month but missed forecasts of 149,000 additions.
Small and medium establishments added 19,000 and 78,000 jobs, respectively. Large establishments recorded an increase of 18,000 jobs.
The goods-producing sector added 6,000 jobs, while the service-providing sector added 107,000 jobs. Within the goods-producing sector, the construction and manufacturing industries added 4,000 and 3,000 jobs, respectively.
In the service-providing sector, trade, transportation, and utilities industries added 35,000 jobs. Similarly, education and health services added 45,000 jobs. Also, the financial activities sector recorded an increase of 21,000 jobs. The leisure/hospitality sector posted an addition of 17,000 jobs.
According to the Job Openings and Labor Turnover Survey (JOLTS) data published by the US Bureau of Labor Statistics, the number of job openings was 9.55 million in September, almost unchanged from 9.49 million in August but greater than forecasts of 9.34 million.
The number of job openings in accommodations and food services increased by 141,000. Arts, entertainment, and recreation posted a rise of 39,000 jobs. However, the federal government and information services recorded a decline of 124,000 and 41,000 jobs, respectively. Likewise, other services reported a decrease of 124,000 job openings.
Following the two-day policy meeting, the US Federal Reserve decided to maintain its benchmark interest rates between 5.25% and 5.50%, in line with economists’ estimates. The US central bank also made changes to its statement to indicate that economic activity grew at a robust pace in the September 2023 quarter. Earlier, Fed officials had mentioned that the US GDP had risen at a “solid pace.”
Notably, this was the second consecutive meeting in which the Fed had chosen not to raise its cash rate, paving the way for the economy to take up the impact of higher borrowing costs.
Furthermore, Fed Chair Jerome Powell stated that the central bank would study inflation, wages, and other economic data and then decide about further rate hikes.
The decision to hold interest rates is expected to keep the US dollar slightly bearish in the short term.
The historical price chart indicates that the NZD/USD pair is ascending after consolidating at 0.5815. The next resistance is anticipated to be only near 0.5950. Additionally, the currency pair is trading above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate the NZD/USD pair to remain in 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.
