New Zealand unemployment rate lower than expected, Kiwi declines
|The New Zealand dollar is lower on Wednesday, ending a three-day rally. In the European session, NZD/USD is trading at 0.5982, down 0.41% on the day.
New Zealand unemployment rate stays at 5.1%, labor market barely expands
New Zealand's employment report for the first quarter indicated that the labor market remains soft. The good news was that the unemployment rate remained unchanged at 5.1%, below the market estimate of 5.3%. Still, unemployment remains at its highest since Q4 of 2020 - a year ago, the rate was just 3.4%.
Employment change posted a small gain of 0.1%, up from a revised -0.2% in Q4 and in line with the market estimate. Wage inflation edged lower to 0.4% from 0.6%, lower than the market estimate of 0.5%.
How will the Reserve Bank of New Zealand react to the latest jobs report? The central bank has been aggressive, slashing the cash rate by 200 points since August 2024 to 3.5%. Today's employment report supports the case for a rate cut at the May 28 meeting and for further cuts during the year. At the April meeting, members warned that the tariffs created downside risks for growth and inflation in New Zealand.
The RBNZ released its Financial Stability Report on Wednesday with a warning that the impact of US tariffs on New Zealand could be "severe" and that there was considerable uncertainty over the outlook for global trade. The report noted that the impact of indirect tariffs on "key trading partners" (likely as reference to China) could be even more damaging that direct tariffs.
Fed expected to stay on the sidelines
The Federal Reserve is almost certain to maintain rate at today's FOMC meeting. There's little doubt about the decision but the markets will be all ears as to the amount of pushback from Fed Chair Jerome Powell, after President Trump has repeatedly pushed him to lower rates.
The markets have priced in a 30% chance of a cut in June, compared to a 63% likelihood just one week ago, according to CME's Fedwatch Tool. We can expect the pricing of a June cut to continue to swing, as the tariff saga continues.
NZD/USD technical
- NZD/USD has pushed below support at 0.6006 and is testing support at 0.5986. The next support level is 0.5980.
- There is resistance at 0.6020 and 0.6026.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.