NZ jobs data beats expectatons, NZD/USD marginally higher

Employment data for the second quarter that was expected to show a tighter labour market has been released as follows:

NZ Q2 Unemployment rate 4.0% (vs. expected 4.5%).

Employment Change +1.0% QoQ (vs. expected +0.7%)

NZD/USD reaction and update

NZD/USD has spiked 13 pips shortly after the release to a fresh high of 0.7037.

The kiwi was better bid into the data following a surprise hawkish hold from the Reserve bank of Australia and announcements in a press release from the Reserve Bank of New Zealand.

The central bank's press release was floating the idea of tighter lending standards which the market read to mean an August hike was a done deal.

The write-up, published on the RBNZ site, said, “House prices are above their sustainable level and the Reserve Bank of New Zealand – Te Pūtea Matua – is now considering tighter lending standards to reduce the risks associated with excessive mortgage borrowing.”

''In truth, the RBNZ was just pointing out that August was when they next have the opportunity to hike, but it got a reaction anyway,'' analysts at ANZ Bank argued.

Kiwi house prices were meanwhile up 24.8% YoY which is more than ten times its inflation target.

''Indeed, it underlines the dilemma that central banks can’t hit all the varied, wonderful targets we want them to. In fact, they can’t even hit just one – inflation: or if they do, it is only at the price of just about everything else going wrong in the background,'' analysts at Rabobank said on the matter. 

About NZ jobs data

The Unemployment Rate released by the Statistics New Zealand is the number of unemployed workers divided by the total civilian labor force. 

Why it matters to traders?

Statistics New Zealand releases employment data on a quarterly basis. The statistics shed a light on New Zealand’s labor market, including unemployment and employment rates, demand for labor and changes in wages and salaries. These employment indicators tend to have an impact on the country’s inflation and Reserve Bank of New Zealand’s (RBNZ) interest rate decision, eventually affecting the NZD. A better-than-expected print could turn out to be NZD bullish.