NZD/USD calm ahead of NZ job data

• New Zealand’s job growth expected to rise to 0.2%

The New Zealand dollar is showing limited movement on Tuesday. Early in the North American session, NZD/USD is trading at 0.6052, down 0.03%.

New Zealand job growth expected to rebound

New Zealand releases the fourth-quarter employment report later today. Employment is expected to rebound with a 0.3% gain, after a decline of 0.2% in the third quarter, which was the first decline in over three years. The unemployment rate is expected to rise to 4.2%, up from 3.9% in the third quarter.

The Reserve Bank of New Zealand will be keeping a close eye on the job numbers as it charts its rate path. The RBNZ has kept the cash rate unchanged at 5.5% for five straight times, which likely means that its steep rate-tightening cycle has run its course. That has the markets hunting for clues of a rate cut, which is expected later in the year.

At the most recent meeting in late November, the RBNZ had a hawkish message for the markets, warning that inflation remained too high and if it rose unexpectedly, the central bank would “likely need to increase further”. I’m doubtful that the RBNZ is really planning to raise rates, barring a shock where inflation moves higher. The RBNZ’s aim may be to pour cold water on rate-cut expectations and allow high rates to continue to push inflation lower.

If key data such as the upcoming employment report are solid, it will provide the RBNZ with more room to continue to keep rates in restrictive territory. Conversely, weak job numbers would raise pressure on the RBNZ to lower rates in order to boost economic growth.

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NZD/USD Technical

• NZD/USD is putting pressure on resistance at 0.6150. Above, there is resistance at 0.6211
• There is support at 0.6054 and 0.5993

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