NZD/USD: Trading The New Zealand Employment February 2014

 New Zealand Employment Change is released on a quarterly basis. It is one of the most important indicators and an unexpected reading can affect the movement of NZD/USD. A reading which is higher than the market forecast is bullish for the New Zealand dollar.

Here are the details and 5 possible outcomes for NZD/USD.

Published on Tuesday at 21:45 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. The release of the employment change indicator, together with the quarterly unemployment rate, is highly anticipated by the markets.

The Q3 release rose 1.2%, compared to just 0.4% in Q2.  This easily beat the estimate of 0.5%. The markets are  bracing for a weaker figure in Q4, with the estimate standing at 0.6%. Will the indicator repeat and beat the prediction?

Sentiment and Levels

After the RBNZ hinted about an imminent rate hike in March, the selloff of the kiwi seems premature. Strong employment numbers later this week could boost the New Zealand dollar. At the same time, the Fed is pressing on with QE tapering and this is bullish for the US dollar. So, the overall sentiment is neutral on NZD/USD towards this release.

Technical levels from top to bottom: 0.82, 0.8150, 0.8135, 0.8060, 0.80 and 0.79.

5 Scenarios

1. Within expectations: 0.4% to 0.8%: In this scenario, NZD/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
2. Above expectations: 0.9% to 1.2%: A strong reading would be an indication of expansion in the economy, and could push the pair above one resistance level.
3. Well above expectations: Above 1.2%: A sharp rise in employment numbers could propel NZD/USD upwards, and a second resistance line could be broken.
4. Below expectations: 0.0% to 0.3%: A lower than expected reading could pull the pair downwards, with one support level at risk.
5. Well below expectations: Below 0.0%: A reading in negative territory will likely hurt confidence in the kiwi, and NZD/USD could break through a second support levels.

For more on the kiwi, see the NZD/USD.

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