The Kiwi dollar remained range-bound against the greenback yesterday following the release of mixed employment data for the December quarter. While the New Zealand unemployment rate declined unexpectedly, the employment change data did not meet forecasts. The extremely negative US ADP non-farm payrolls data kept the greenback weaker. Overall, the NZD/USD pair traded in a narrow range of between 0.6630 and 0.6661 in the past 24 hours.
According to Statistics New Zealand, the country’s unemployment rate inched lower to 3.20% q-o-q in the December 2021 quarter, from 3.30% in the earlier quarter, and delighted the market consensus calling for no change in the jobless rate.
However, employment change, which reflects the change in the number of employed people, increased 0.10% q-o-q in the fourth quarter, following a rise of 1.90% in the prior quarter and missed the 0.40% growth anticipated by economists. The number of unemployed people fell by 5,000 to 93,000. During the fourth quarter of 2021, 2,831,000 individuals remained employed, an increase of 3,000 from the September 2021 quarter.
Underutilization rate stood at 9.20% in the December 2021 quarter, a level last seen in December 2007 quarter and unaltered from the earlier quarter. The number of people who remained underutilized stood almost unaltered at 277,000.
Also, the employment rate was 68.80% in the reported period. Furthermore, average ordinary time hourly earnings increased to $35.61, up from $35.25 in the earlier quarter.
In the year to the December 2021 quarter, wage rates rose by 2.60%, while filled jobs grew 4.20% (or 83,600) during the same period. The number of filled jobs, as assessed by the Quarterly Employment Survey (QES), increased 1.40% (or 29,000) to 2,088,600 in the December 2021 quarter. The labor force participation rate stood almost unaltered at 71.10% in the December 2021 quarter, compared with 71.20% in the September 2021 quarter.
According to the data published by Automatic Data Processing, private (non-farm) payrolls in the US recorded a loss of 301,000 jobs in January, following an addition of 776,000 jobs in the prior month. The reading has come as a rude shock to economists who were anticipating the non-farm payrolls to increase by 185,000.
While small businesses lost 144,000 jobs, medium and large businesses posted a loss of 59,000 and 98,000 jobs, respectively.
Goods-producing industries lost 27,000 jobs. Also, service-providing industries posted a loss of 274,000 jobs. However, franchise employment added 1,600 jobs.
With respect to goods-producing industries, manufacturing companies lost 21,000 jobs. Also, the construction sector lost 10,000 jobs. Mining/natural resources industries recorded a loss of 4,000 jobs.
In the service-providing sector, the leisure/hospitality industry posted a loss of 154,000 jobs. Furthermore, trade/transportation/utilities recorded a loss of 62,000 jobs. Likewise, education/health services reported a loss of 15,000 jobs.
The weak US payroll data is expected to make the greenback lose ground against its peers, including the New Zealand dollar, in the days ahead.
Technically, the NZD/USD pair is moving along the ascending trend line, as shown in the image below. The currency pair is also having solid support at 0.6630. The next minor resistance is anticipated only near 0.6690. Additionally, the stochastics indicator is in the bullish zone. Therefore, we are anticipating the currency pair to remain in an uptrend in the short term.
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.
