New Zealand Employment Preview: Upside surprise to support NZD/USD rebound

FXStreet Team FXStreet

New Zealand’s unemployment rate is expected to have climbed north in the fourth quarter despite a mild improvement in other employment indicators, the NZ Statistics will show this Wednesday. According to FXStreet’s Dhwani Mehta, the kiwi bulls could extend Tuesday’s advance on an upside surprise.

See: NZD/USD to fall towards 0.70 in the first quarter of 2021 – DBS Bank

Key quotes

“The NZ Unemployment Rate is foreseen at 5.6% in Q4 2020, up from 5.3% recorded in the July-September quarter. The jobless rate is likely to hit the highest since Q2 2015. The economy did not see any jobs growth in the reported period, with the figure likely to arrive at 0% vs. -0.8% seen in Q3. The Participation Rate is seen a tad higher at 70.2% in the final quarter of 2020 vs. Q3’s 70.1%.”

“A disappointment in the jobs report could prompt the Reserve Bank of New Zealand (RBNZ) to consider negative rates as a policy option, in a bid to revive the post-pandemic labor market recovery.”

“Any upside surprises in the employment report could join the recent market's optimism over the US fiscal stimulus, supporting Tuesday’s rebound in NZD/USD. Broad market sentiment and the US dollar dynamics could also have a significant impact on the kiwi at the time of the data release.”

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