The NZD/USD pair rose sharply after the strong New Zealand jobs data. The pair shot up to a monthly high of 0.7065, which was more than 2.65% above the lowest level in July.
New Zealand jobs data
New Zealand employers continued adding workers at a strong pace in the second quarter as the economy strengthened. Data published on Wednesday showed a steep decline in the unemployment rate in the second quarter. The rate declined to 4.0% while the underutilisation rate fell to 10.5%. At the peak of the pandemic, the country’s unemployment rate rose to 5.3%. In a note, Sean Broughton of the agency said:
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“The fall in unemployment is largely in line with other labour market indicators, including declining numbers of benefit recipients and increased job vacancies, and recent media reports of labour shortages and skills mismatches.”
The NZD/USD also reacted to the strong wage numbers. The employment change rose from 0.6% in the first quarter to 1.0% in the second quarter. Further, wages continued to flourish as companies struggled to find workers. The labour cost index rose from 0.4% to 0.9% on a quarter-on-quarter basis. It rose by 2.2% on an annualised basis.
These numbers reinforce the Reserve Bank of New Zealand view that the economy is doing better than expected. In its decision last month, the bank decided to leave rates unchanged and to wind down the quantitative easing program.
Other New Zealand numbers have been relatively strong recently. For example, the housing market has been strong, with prices soaring to a record high. Data published last week showed that the number of new consents rose to a record 44,299 in the year ended in June. Looking ahead, the NZD/USD will react to the latest US non-farm payrolls data.
NZD/USD technical analysis
The four-hour chart shows that the NZD/USD pair has been in a strong bullish trend recently. Along the way, the pair moved above the important resistance at 0.7045. It also rose above the 25-day and 50-day moving averages. Additionally, it is along the upper line of the Bollinger Bands. Therefore, the pair will likely continue rising, with the next key resistance level of 0.7150. This view will be invalidated if the price declines below the support at 0.700.
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