Home Forex Market Analysis NZDUSD Analysis: Kiwi Strengthens on Positive Labor Data Report

NZDUSD Analysis: Kiwi Strengthens on Positive Labor Data Report

162
0
NZDUSD Analysis: Kiwi Strengthens on Positive Labor Data Report
  • The quarter ending June 2021 saw a sharp decline in unemployment (4.0%) and underutilization at 10.5% in New Zealand. 
  • Hourly earnings increased 4.0%, in line with wage inflation at 2.1% in the quarter. 
  • US factory orders for June 2021 (MoM) beat consensus estimates at 1.5%. 

The NZDUSD pair gained 0.70% at 3:53 pm GMT on August 3, 2021, from the previous day’s close. The pair’s one-year change analysis stands at +5.40% after it hit a high of 0.7019 from a low of 0.6964 on the trading day. Despite US factory orders for June 2021 (MoM) beating consensus estimates at 1.5%, they still fell below the previous rates at 2.3%. 

Figure 1 US Factory Orders from July 2020-July 2021

Figure 1 US Factory Orders from July 2020-July 2021

The highest gains in factory activity were made by orders of transportation items (+2%) while machinery and computers stood at +1%. Electrical appliances followed at +0.3%. The orders surged 18.4% YoY. Orders for metallic orders declined by 0.5%. 

Strong NZ economy

Economists were enthused by the New Zealand economy, with a positive reaction noted in the agricultural & construction sectors. The quarter ending June 2021 saw a sharp decline in unemployment (4.0%) and underutilization at 10.5%. The number of people receiving government support also fell as job vacancies increased across all sectors. 

The unemployment level was down 12.4% (-17,000) in June 2021 to stand at 117,000 (YoY). 

Figure 2 Decline in unemployment rates in NZ among different genders

Figure 2 Decline in unemployment rates in NZ among different genders

Q2 2021 saw employment rise 1.0% from a previous rate of 0.6%. It beat estimates at 0.7%, with the unemployment rate at 4.0%. With this unemployment rate, the OECD ranked NZ 8th among 38 countries (5 positions above its previous position at 13th in the previous quarter).

The employment rate for individuals aged 15-64 years rose to 77.6% in New Zealand, equal to the level in Japan. The two countries were ranked 3rd by the OECD on this basis among the 38 countries in the quarter ending June 2021. 

Hourly earnings increased 4.0%, in line with wage inflation at 2.1% in the quarter. 

Figure 3 Increase in NZ wage inflation against rising hourly earnings

Figure 3 Increase in NZ wage inflation against rising hourly earnings

The increase in wages at a rate of 2.1% led to an upward revision of weekly earnings to NZ$1,360.62 for full-time employees. Hourly earnings inched up to $34.76. The participation rate of the NZ labor force rose 70.5% in Q2 2021 (+0.1%) with an annual change of +0.6%. Additionally, the index for the cost of labor rose 2.2% from a previous reading of 1.6%, beating estimates at 2.0%. 

US economic release

The US is slated to release the total vehicles sold in July 2021 as of August 4, 2021. It reported a total sale of 15.40 million new vehicles. 

This comes as the American Petroleum Institute (API) reported a decline in the crude oil stock (measured weekly) to 0.879 million barrels. It represented a dismal performance with the previous record at -4.728 million and failed to beat forecasts that predicted a decline of 2.900 million barrels. 

At the time, the US dollar fell 0.26% against the British pound and lost 0.19% to the Japanese yen. 

Technical analysis

There is a pullback forming in the NZDUSD pair after the pair crossed 0.7034. The pair is trading above the 9-day EMA (at 0.6988), showing that we could see a further surge. It may reach 0.7099, as the market seeks to move past the significant level of 0.7100.  

NZDUSD chart

The prior decline led the pair to find support at 0.6879 on July 20, 2021, before initiating the pullback. We can see the 14-day RSI rising to 55.88, pointing to the pair’s strengthening. Failure of the upward movement may lead to a decline towards 0.6928.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

29  +    =  30