New Zealand Dollar Slides As Unemployment Rate Rise More Than Expected
Thursday morning in Asia, the New Zealand dollar edged sharply lower against its major opponents following a government report showed that New Zealand’s unemployment rate unexpectedly jumped in the second quarter.
The kiwi tumbled to more than a 2-month low against against the Australian dollar and multi-day lows versus the euro and the US dollar.
Statistics NZ reported today that the nation’s jobless rate rose to 6.8 percent from the first quarter reading of 6.0 percent. The increase was larger than the 0.2 percent rise forecast by most economists.
The number of unemployed New Zealand residents rose by 19,000 for the quarter, reaching a total of 159,000. Employment in the June quarter decreased by 6,000 or 3.0 percent following an increase of 21,000 in the March quarter.
On the equity front, New Zealand’s NZX All Capital Index is presently trading flat at 3,066 and NZX 50 Index is currently up 2 points, or 0.06%, at 3,040.
The New Zealand dollar that rose to a 9-day high of 0.7360 against the greenback before the unemployment report staged a steep slide amid the report and slumped to a 5-day low of 0.7278 around 7:20 pm ET. Thereafter, the kiwi-buck pair moved sideways and is presently quoted at 0.7282. The pair closed yesterday’s deals at 0.7351.
Better-than-expected economic data from the U.S. on Wednesday fueled investors’ risk appetite, with the Institute of Supply Management said its non-manufacturing index rose to 54.3 in July from 53.8 in June, with a reading above 50 indicating continued growth in the service sector. Economists had been expecting the index to edge down to a reading of 53.0.
Meanwhile, the payroll processor Automatic Data Processing Inc. said in a report that non-farm private employment increased by 42,000 jobs in July following an upwardly revised increase of 19,000 jobs in June. Economists had expected an increase of about 25,000 jobs compared to the addition of 13,000 jobs that had been reported for the previous month.
The New Zealand dollar that rose to a 2-day high of 63.59 against the yen at the beginning of Thursday’s Asian session pulled back and hit as low as 62.70 before holding steady around 9:45 pm ET. The kiwi-yen pair that finished Wednesday’s North American deals at 63.43 is presently quoted at 62.80.
Against the Australian dollar, the New Zealand dollar slumped to more than a 2-1/2 month low of 1.2592 around 7:20 pm ET and the pair moved sideways thereafter. The aussie-kiwi pair, which ended yesterday’s deals at 1.2485, is presently quoted at 1.2571.
The New Zealand dollar slipped to a 6-day low of 1.8101 against the euro before moving range bound around 7:20 pm ET. The euro-kiwi pair that closed yesterday’s deals at 1.7924 is presently quoted at 1.8070.
Looking ahead, the European Central Bank will announce its rate decision at 7:45 am ET. Analysts expect the ECB to retain the interest rate at 1 percent.
German factory orders data for June, which is due out ahead of the ECB rate may also garner some market attentions in the upcoming European session.
From the U.S., the customary jobless claims data for the week ended July 31 is slated for release at 8:30 am ET.
