NZD/USD gathers strength above 0.5950 after better-than-expected New Zealand employment data
- NZD/USD gains momentum around 0.5980 in Wednesday’s early Asian session, gaining 0.54% on the day.
- New Zealand’s Unemployment Rate ticked higher to the highest since March 2021, rising to 4.6% in Q2 vs. 4.3 prior.
- Fed’s Daly expects interest rate cuts to come as the labor market weakens.
The NZD/USD pair extends the rally near 0.5980 during the early Asian session on Wednesday. The further upside of the New Zealand Dollar (NZD) is bolstered by the upbeat New Zealand employment report. Traders trim bets on RBNZ, pivoting to rate cuts next week.
Data released by Statistics New Zealand on Wednesday showed that the country’s Unemployment Rate rose to 4.6% in the second quarter (Q2) from 4.3% in the first quarter, which is better than the estimated 4.7%. Additionally, the Employment Change increased by 0.4% in Q2 from a 0.2% decline in the previous reading. This figure came in above the market consensus of a 0.2% decrease. The better-than-expected readings have diminished the possibility of the Reserve Bank of New Zealand (RBNZ) rate cut next week, which lift the Kiwi against the USD.
On the other hand, markets expect a more aggressive rate cut starting in September after the weaker US employment data in July raised the fear of a looming US recession. San Francisco Federal Reserve President Mary Daly said on Monday that she expects rate reduction later this year, adding that progress on inflation and a clear slowdown in hiring likely will drive the central bank to some extent of policy easing. Meanwhile, Chicago Fed President Austan Goolsbee stated that if there are trouble signs with the economy, the central bank will fix it.
