New Zealand's second-quarter employment report is set to show an aggressive jump in the unemployment this Wednesday at 22:45 GMT. A worse-than-expected report could prompt the RBNZ to expand its QE programme or steer the key rates into the negative territory, weighing on the kiwi. However, dollar weakness could likely cushion NZD/USD’s downside, FXStreet’s Dhwani Mehta reports.
Key quotes
“The unemployment rate is expected to have leaped to 5.8% in the three months to June after rising to 4.2% in Q1. Employment in the country is likely to have fallen by 2.0% when compared to a 0.7% rise seen in the previous quarter. The participation rate is seen ticking lower to 69.8% vs. the previous 70.4%. The labor cost index is expected to have increased by 0.3% QoQ and by 1.9% YoY.”
“The sluggish employment data could boost the dovish RBNZ expectations and exacerbate the pain in the kiwi. Although the reaction to the outcome is likely to be short-lived, as the risk-sensitive NZD will continue to remain at the mercy of the market mood and US dollar dynamics.”
“Should the data disappoint the market forecasts, the Kiwi could likely see a technical break of the rising trendline support at 0.6582. Although a daily close below the latter is critical to validate the pattern. The bullish 50-day Simple Moving Average (DMA) at 0.6505 could rescue the bulls if the selling pressure intensifies.”
Reprinted from fxstreet, the copyright all reserved by the original author.
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