The New Zealand Dollar (NZD) has been bullish for three consecutive weeks. The bulls had largely dominated this pair, pushing the price higher from the three-week low at $0.6142 to the $0.6327 yesterday. This marks a 185 pips gain for the bulls within the last three weeks. The market awaits the employment change data report to be released today to determine the next direction for this pair. The price ranges at $0.6328 region during the Asian session today. The New Zealand dollar seems to have profited much from the dollar weakness in the past three weeks. The dollar index had been on a downward trend in the past three weeks after reaching 109.24 in the second week of July. This has offered other currency pairs matched with the US dollar as their counter currency an opportunity to rebound from their hitherto prolonged downward trend. The US dollar seems to be losing its dominance once again as the fear of possible recession increased among investors in recent days. Investors are gradually seeking other promising economies to diversify their investments.
Investors are eagerly awaiting the New Zealand employment change report, which will determine the next direction for this pair in the market today.
What is an employment change report, and how does it affect NZDUSD?
The employment change report is an important economic data that measures the change in the number of employed people versus the unemployed. It is essential data used to predict the financial strength of the country. Thus, investors are highly attracted to the country’s currency when there is a significant improvement in employment change.
The New Zealand employment change report for the concluded quarter in June is due to be released today. Often the information is released 35 days after the end of each quarter. The forecast for this data is 0.4%, while the previous record was 0.1%. A higher reading from this report is bullish for the New Zealand dollar. It will likely revive the bullish momentum, while a lower reading below the forecast will disperse the bulls causing a downward trend for NZDUSD.
Aside from this, the unemployment rate report will also accompany this data. Reducing the unemployment rate is very good for the New Zealand dollar. The forecast for this data is 3.1%. The previous record was 3.2%.
Factors that influence NZDUSD today
Apart from the Employment change report, which we have discussed as the primary factor influencing the NZDUSD today, other related factors influence the general trend for this pair today. Their outcome will either strengthen the result of the employment change report or limit it. These factors have been discussed below:
- Labour Cost Index: The labour cost index, which measures the changes in labour costs paid by various companies excluding overtime payments, is due to be released today. The labour cost index is often seen as a leading indicator of the consumer inflation rate. This is because when companies pay more for labour, it encourages more spending, thereby increasing the inflation rate. The forecast for this data is 1.1%, while the previous record was 0.7%. Higher reading from this data is good for the New Zealand dollar to continue its bullish trend.
- ANZ Commodity Prices m/m: The Australian and New Zealand Commodity Prices report measures the global price of exported commodities. Here, the average cost of the country’s major export commodities is sampled on the worldwide market and then compared to the previous sampling. An increase in the average price of the country’s exported Commodities is good for the currency as it increases the demand for the New Zealand dollar across borders. The previous reading for this data is -0.4%. An increase in this data will support the bullish momentum for the NZDUSD.
Above all, investors are equally expected to pay attention to the US JOLTS Job Openings, which affects the US dollar directly but affects the NZDUSD indirectly. An increase in dollar strength will limit the NZDUSD bullish momentum and vice versa. The US JOLTS jobs openings state the number of newly created jobs unoccupied by the unemployed in the completed month. An increase in this data will strengthen the US dollar, while a reduction will weaken it. The forecast for this data is 10.99M, while the previous data was 11.25M.