In the wake of Forex trading in February, the Labor Cost Index was published in New Zealand, and it wasn’t good. The index did rise, but only at 0.7%, lower than a rise of 0.9% that was expected. In initial forex tradin this week, the kiwi lost ground to 0.5075 and extended its falls from last week.
I was covering the interesting NZD/USD currency pair as it broke the support line of 0.5150 and proceeded in going lower. Now, 2 New Zealand dollars for one American dollar really happens.
The Labor Cost Index was the most recent blow for the kiwi, after the RBNZ cut the interest rate by a whopping 1.5% to 3.5%, and a very weak trade balance. All this happened last week.
The bad figure, on Sunday evening, comes ahead of the Employment Change and the Unemployment Rate that are due in New Zealand on Wedneday night. More economic indicators are in the forex weekly outlook.
Now, after all this price action, will the NZD/USD continue below 0.5?
Since this is only very early trading, at Sunday 22:00 GMT, it can go anywhere at this moment.
Update: An article in scoop.co.nz elaborates on the related issue, Total paid hours:
Total paid hours, when seasonally adjusted, decreased by 1.4 percent in the year to December 2008, according to the Quarterly Employment Survey (QES) released by Statistics New Zealand today. This is the first annual decrease in paid hours since the year to September 1999, and was mainly due to decreases in the manufacturing, construction, and wholesale trade industries. Seasonally adjusted total paid hours also decreased by 1.4 percent in the December 2008 quarter.
The situation in New Zealand isn’t good. Well, like everywhere else.
Official release data is here.