The New Zealand dollar weakened against the other major currencies in the Asian session on Wednesday, as more than expected unemployment rate for the first quarter of 2015, fueled rate cut speculation by the central bank.
Data from Statistics New Zealand showed that the unemployment rate in New Zealand was a seasonally adjusted 5.8 percent in the first quarter of 2015. That missed forecasts for 5.5 percent, and it was unchanged from the previous three months following a revision from 5.7 percent.
Employment was up 0.7 percent on quarter – also missing expectations for 0.8 percent and down from 1.2 percent in the fourth quarter. On a yearly basis, employment added 3.2 percent versus forecasts for 3.3 percent and down from 3.5 percent in the previous three months.
The weak jobs data intensified speculation among some economists that the Reserve Bank of New Zealand is likely to cut its key interest rates later this year.
Reserve Bank of New Zealand Governor Graeme Wheeler said last week, “The timing of future adjustments in the OCR will depend on how inflationary pressures evolve in both the non-traded and traded sectors. It would be appropriate to lower the OCR if demand weakens, and wage and price-setting outcomes settle at levels lower than is consistent with the inflation target.”
Meanwhile, most Asian stock markets were trading lower, following the weak cues from Wall Street overnight amid ongoing concerns about the outlook for interest rates following the release of upbeat economic data.
The benchmark NZSE 50 index is currently down 20.80 points or 0.36 percent at 5,766.
Dairy product prices, New Zealand’s largest export, have fallen to the lowest in over five years in Fonterra’s GlobalDairyTrade auction overnight.
Prices fell for the fourth time in a row, down 3.2 per cent since the last auction in mid-April.
Tuesday, the NZ dollar showed mixed trading against its major rivals. While the NZ dollar fell against the U.S. dollar and the Australian dollar, it rose against the yen and the euro.
In the Asian trading today, the NZ dollar fell to more than a 3-month low of 1.0644 against the Australian dollar and nearly a 2-1/2-month low of 1.4987 against the euro, from yesterday’s closing quotes of 1.0505 and 1.4787, respectively. If the kiwi extends its downtrend, it is likely to find support around 1.08 against the aussie and 1.52 against the euro.
Against the U.S. dollar and the yen, the kiwi dropped to more than a 3-week low of 0.7458 and a 3-week low of 89.48 from yesterday’s closing quotes of 0.7555 and 90.55, respectively. The kiwi may test support near 0.71 against the greenback and 86.00 against the yen.
Looking ahead, PMI reports from major European economies for April and Eurozone retail sales data for March are due to be released in the European session.
In the New York session, ADP U.S. private payrolls data and Canada Ivey PMI – both for April, are slated for release.
At 9:15 am ET, Federal Reserve Chair Janet Yellen and International Monetary Fund Managing Director Christine Lagarde are scheduled to participate in a “Finance and Society” conversation before the Institute for New Economic Thinking Conference on Finance and Society hosted by the IMF in Washington DC.
At 1:15 pm ET, Federal Reserve Bank of Kansas City President Esther George participates in “Credit Markets: Booms, Busts and Distortions” panel before an event hosted by the International Monetary Fund, in Washington DC.
After 15 minutes later, Federal Reserve Bank of Atlanta President Dennis Lockhart is expected to speak on the economic outlook and monetary policy before a luncheon hosted by the Baton Rouge Rotary, in U.S.
The Japanese banks will be closed in observance of Constitution Day holiday.
The material has been provided by InstaForex Company – www.instaforex.com