The New Zealand dollar was the weakest most-traded currency on the Forex market today following the unexpectedly big increase of the unemployment rate reported earlier this week. The positive trade data in China, New Zealand’s biggest partner, and optimism about the US-China trade negotiations did not help the currency.
Statistics New Zealand reported on Tuesday that the unemployment rate was at 4.2% in the September quarter, up from 3.9% in the previous quarter. Markets were expecting a bit smaller increase to 4.1%. Yet the reading was not too bad as the rise followed the drop to the 11-year low. The number of employed people increased by 0.2%, while annual wage inflation was at 2.4%. Prices senior manager Paul Pascoe commented on the data:
Labour market data is most useful when placed in the context of a time series. While the unemployment rate has returned to the level seen in the March 2019 quarter, it has largely been tracking down since late 2012. Despite the quarterly rise in unemployment, the underutilisation rate, which is a broader measure of spare capacity in the labour market, has fallen to the lowest level in over eleven years. The fall in underutilisation this quarter was driven by a drop in the number of underemployed people, those who work part time but are looking to work more hours.
China’s trade balance widened to $42.81 billion in October from $39.65 in September, above the market consensus of $40.83 billion. While both imports and exports declined, the drop was not as big as markets were anticipating. Exports fell by 0.9%, year-on-year, versus the market consensus of a 3.9% drop. Imports fell by 6.4% compared with the median forecast of an 8.9% drop.
NZD/USD dropped from 0.6364 to 0.6333 as of 13:51 GMT today. EUR/NZD rallied from 1.7349 to 1.7415. NZD/JPY edged down from 69.53 to 69.24.
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