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The kiwi consolidates its advantage over G10 peers after getting a fillip from pretty stellar Q2 jobs data, which saw breakdown figures beat expectations virtually across the board. The unemployment rate dropped to 4.0% (BBG est. was 4.4%) from the revised 4.6% recorded in Q1 on the back of a stronger than expected surge in employment. In May MPS, the RBNZ did not expect average unemployment to reach 4.0% over the forecast horizon through 2023. Both underemployment and underutilisation moderated, while wage growth was faster than expected, suggesting that demand-side inflationary pressure continues to mount.
- As would be expected, hawkish RBNZ repricing resumed, with the OIS strip now fully pricing a 25bp OCR hike at the August meeting. Tightening bets seen after the release pushed NZD/USD higher. The rate topped out at $0.7044 and last sits +22 pips at $0.7039. Familiar technical picture are still in play, albeit the rate almost tested resistance from Jul 15 high of $0.7045.
- AUD/NZD has taken a dip, last trades -32 pips at NZ$1.0508, after printing its worst level since Dec 3, 2020. Bearish focus turns to a key cycle high located at NZ$1.0418, where the pair bottomed out on Dec 1, 2020.
- NZD/JPY last seen +22 pips at Y76.74. Further gains past Jul 29 high of Y76.89 would clear the way to Jul 26 high of Y77.31. Bears look for a pullback under the nearby 200-DMA, which intersects at Y76.13.
Fig. 1: New Zealand Unemployment Rate (%)
Source: MNI - Market News/Bloomberg