Kiwi Trims Gains Tuesday, Strong Labour Market Report Supports RBNZ's Hawkish Stance

NZD/USD trimmed its prior gains Tuesday on a stronger than expected U.S. JOLTS report & manufacturing PMI data, which came out as participants were preparing for the FOMC rate decision this week.

• New Zealand's Q3 Labour Force Survey contained strong readings for wages and employment, prompting a marginal uptick in RBNZ rate-hike pricing (dated OIS prices ~70bp for the next meeting). Although the unemployment rate stayed at 3.3% versus 3.2% estimate, employment grew 1.3% Q/Q and the participation rate rose more than forecast to 71.7%
• RBNZ Dep Gov Hawkesby said labour market data "came in broadly consistently with our most recent projections." HE admitted that inflation is high and the jobs market is hot, but will weaken under pressure from rising interest rates.
• Elsewhere, the RBNZ's Financial Stability Report noted that house prices remain above "sustainable levels" and a continued decline in prices would be "desirable" for financial stability. The latest CoreLogic House Price Index extended losses last month, falling 1.3% M/M, with the expected RBNZ rate hikes about to "lead to a lot of belt tightening by mortgage holders."
• The pair showed above its 50-DMA yesterday before pulling back. It last trades flat at $0.5840, with bears looking for a retreat towards Oct 21 low of $0.5600. Conversely, a break above Nov 1 high of $0.5903 would bring the $0.6000 mark into play.