New Zealand employment grew 0.2% in Q3, slowed from 0.6% in Q2, missed expectation of 0.3%. Unemployment rose rose sharply to 4.2%, up from 3.9%, higher than expectation of 4.1%. Labor force participation rate rose 0.1% to 70.4%. Labor cost index rose 0.6% qoq, matched expectations.
Despite the surge in unemployment rate, it’s still lower than the 4.4% forecast by RBNZ in the August Monetary Policy Statement. Then, there should be any change to RBNZ’s decision next week, when markets are expecting a hold. Nevertheless, the data still raises some concern over the sustainability of of impact of RBNZ’s -50bps rate cut back in August.
NZD/USD’s sharp decline today now raises the chance that corrective recovery from 0.6203 has completed at 0.6465, after failing to sustain above 0.6450 resistance, on bearish divergence condition in 4 hour MACD. Focus is back on 0.6333 support. Break will add more credence to this case and target a test on 0.6203 low. Break will extend the down trend form 0.7557 (2017 high), to retest 0.6102 (2015 low).
