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New Zealand dollar slides below 0.5900 after unemployment rate jumps
NZ unemployment rose to 5.6% in Q2, above expectations, weakening the case for aggressive RBNZ tightening and adding selling pressure on NZD/USD.
The New Zealand dollar weakened below 0.5900 against the US dollar in early European trading, with NZD/USD hovering near 0.5870, according to FXStreet. FXStreet attributed the move to a labor market deterioration in New Zealand. Statistics New Zealand reported that the unemployment rate rose to 5.6% in Q2 from 5.3% in Q1, versus 5.4% expected, while the employment change came in at 0.5% for the June quarter versus 0.2% previously.
The weaker labor data also undercut arguments for aggressive interest rate hikes from the Reserve Bank of New Zealand. FXStreet said the increase in the jobless rate weakened the case for more aggressive RBNZ action, limiting support for the Kiwi.
FXStreet added that traders are positioned for upcoming US data later this week, including ADP Employment and ISM Services PMI, and are also watching the US July figures due on Friday. It also noted that expectations around a potential US Iran interim deal to reopen the Strait of Hormuz could help cap NZD losses.