The New Zealand dollar (Symbol: NZDUSD) maintained its position, staying close to a two-week high reached in the previous session. This stability comes on the back of mixed domestic economic data and external influences from a softer US dollar
Picture: NZDUSD trades near a two-week high after positive employment data, as observed on the VT Markets app.
The resilience of the New Zealand dollar can largely be attributed to recent domestic economic data. The slight increase in the unemployment rate was better than expected, indicating that the labour market remains relatively strong despite global economic uncertainties. The employment growth further supported this view, suggesting that the economy is still on a solid footing.
The slowdown in wage inflation, although ongoing, was less severe than anticipated, which has led to a reduction in the likelihood of an imminent rate cut by the Royal Bank of New Zealand (RBNZ). Traders have adjusted their positions accordingly, with market pricing now reflecting a 60% chance of a rate cut next week, compared to a nearly certain cut just days ago.
Externally, the New Zealand dollar has found additional support from a weaker US dollar. The greenback has been under pressure following disappointing US jobs data, which has exacerbated fears of a looming recession.
The diminished expectations of a rate cut by the RBNZ could provide upward momentum for the Kiwi in the near term. However, traders should take a risk-management approach as external factors, particularly developments in the US economy, could introduce volatility. Monitoring data releases, such as US jobless claims, will be crucial for making informed trading decisions.
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