The labour market report for the second quarter (Q2) was significantly hotter than expected.
Total employment rose 1.1% q/q, the unemployment rate fell from 4.6% to 4.0%, while private sector wage growth rose by 0.9%. A strong report that confirmed the labour market had regained the momentum it had pre the pandemic on all metrics.
Despite the detection of one Covid case in the middle of August that sent the country back into level 4 lockdowns, tomorrow's employment report is expected to reflect a continuation of that momentum. Partial data on employment has been robust, indicating a reluctance by firms to let hard to get staff go, supported by the government's wage subsidy.
The market expects employment to increase by +0.4% q/q, the unemployment rate to fall to 3.9%, and a solid increase in wage growth of +0.8% q/q. Given the uncertainty created by the lockdown, allow for some variance, aware that stronger numbers will have the market calling for a 50bp rate hike in November.
Turning to the charts, after an impulsive rally in October from below .6900c, the NZDUSD has spent the past ten days consolidating recent gains in a .7220 - .7130 range. A break and close above range highs at .7220/30 is needed to indicate the NZDUSD has commenced the next leg higher towards Mays .7316 high.
We would only reconsider the bullish bias if the NZDUSD were to see a sustained close below the 200 moving average at .7100c.
Source Tradingview. The figures stated areas of November 2nd, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
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