NZD/USD: Trading the New Zealand Employment Change

New Zealand Employment Change is released on a quarterly basis. It is one of the most important New Zealand indicators and an unexpected reading can have a strong effect on 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 posted a small gain of 0.3% in Q2, short of the forecast of 0.5%.  This marked the indicator’s lowest reading since Q4 of 2012. Little change is expected in the Q3 release, with an estimate of 0.4%.

Sentiment and Levels

While the New Zealand economy is in good shape, the RBNZ certainly prefers a weaker New Zealand dollar, and the growing possibility of a December rate hike by the Fed, along with the prospect of a rate cut by the RBNZ could send the kiwi to lower levels. So, the overall sentiment is bearish on NZD/USD towards this release.

Technical levels from top to bottom: 0.6800, 0.6770, 0.6700, 0.6650, 0.6615 and 0.6560.

5 Scenarios

  1. Within expectations: 0.0% 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 1.3%: 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 1.3%: A sharp rise in employment numbers could propel NZD/USD upwards, and a second resistance line could be broken.
  4. Below expectations: -0.5% to -0.1%: A lower than expected reading could pull the pair downwards, with one support level at risk.
  5. Well below expectations: Below -0.5%: A reading in deep negative territory will likely hurt confidence in the kiwi, and NZD/USD could break through a second support level.

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

Get the 5 most predictable currency pairs

Leave a Reply

Your email address will not be published. Required fields are marked *