NZD/USD – NZ Dollar Slide Continues on Weak NZ Job Numbers

NZD/USD continues to lose ground on Wednesday, as the pair trades just below the 0.66 line in the North American session. The New Zealand dollar lost ground as New Zealand employment numbers disappointed. Employment Change declined by 0.4%, while the unemployment rate edged up to 6.0%. Over in the US, ADP Nonfarm Payrolls was very close to the forecast, and Trade Balance and ISM Services PMI both beat expectations. As well, Fed Chair Janet Yellen continues her testimony on Capitol Hill, as she speaks before the House Financial Services Committee.

It’s been a rough week for New Zealand releases. The GDT Price Index, which measures dairy prices at auction, looked dismal in the first November reading (the indicator is released twice each month),posting a sharp decline of 7.9%. This marked the indicator’s worst showing in six months.  On Tuesday, Employment Change posted a decline of 0.4% in the third quarter, surprising the markets, which had expected a 0.4% gain. The unemployment rate edged higher to 6.0% in the third quarter, marking the fourth straight quarter that the indicator has moved higher. The New Zealand dollar has responded to these weak readings by losing close to 200 points this week, as NZD/USD trades at 4-week lows.

It was a positive day for US numbers, and this helped boost the US dollar. ADP Nonfarm Payrolls, which precedes the official Nonfarm Payroll report, came in at 182 thousand, very close to the forecast but well off last month’s reading of 200 thousand. The September US trade deficit narrowed to $40.8 billion, its lowest level since February. There was more good news from the ISM Non-Manufacturing PMI, which jumped to 59.1 points, easily beating the estimate of 56.6 points.

With a rate hike from the Fed back on the table, the markets will be keeping a close eye on US key releases, especially employment and inflation numbers. There was much anticipation ahead of the US Advance GDP for the third quarter, which was released last week. As it turned out, this key event didn’t shake up the markets, as the reading of a 1.5% gain was almost identical to the forecast of 1.6%. Still, this figure was much lower than the Q2 Final GDP of 3.9%, pointing to a slowdown in the US economy. We’ll get a look at a host of additional job numbers this week, with the release of unemployment claims and the unemployment rate on Thursday and Nonfarm Payrolls on Friday. Nonfarm Payrolls is expected to improve in the October reading, and if the indicator beats expectations, the dollar could make broad gains.

NZD/USD Fundamentals

Tuesday (Nov. 3)

• 21:45 New Zealand Employment Change. Estimate 0.4%. Actual -0.4%
• 21:45 New Zealand Unemployment Rate. Estimate 6.0%. Actual 6.0%

Wednesday (Nov. 4)

• 10:30 FOMC Member Lael Brainard Speaks
• 13:15 US ADP Nonfarm Employment Change. Estimate 183K. Actual 182K
• 13:30 US Trade Balance. Estimate -42.7B. Actual -40.8B
• 14:45 US Final Services PMI. Estimate 54.6 points Actual 54.8 points
• 15:00 Federal Reserve Chair Janet Yellen Testifies
• 15:00 US ISM Non-Manufacturing PMI. Estimate 56.6 points. Actual 59.1 points
• 15:30 US Crude Oil Inventories. Estimate 2.5M. Actual 2.8M
• 19:30 FOMC Member William Dudley Speaks

Upcoming Key Events

Thursday (Nov. 5)

• 13:30 US Unemployment Claims. Estimate 263K
  

*Key releases are highlighted in bold

*All release times are GMT

NZD/USD for Wednesday, November 4, 2015

NZD/USD November 4 at 16:20 GMT

NZD/USD 0.6585 H: 0.6667 L: 0.6574

NZD/USD Technical

• NZD/USD was uneventful in the Asian session, but posted losses in the European session. The pair is steady in the North American session.
• 0.6605 continues to provide support.
• 0.6738 is a strong resistance line.
• Current range: 0.6605 to 0.6738

Further levels in both directions:

• Below:0.6605, 0.6449 and 0.6368
• Above: 0.6738, 0.6897 and 0.7011

OANDA’s Open Positions Ratio

NZD/USD ratio is pointing to gains in long positions, which currently have a majority of positions (53%). This indicates trader bias towards the pair reversing directions and losing ground.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.