The New Zealand dollar jumped to the highest point in weeks after positive employment numbers from the country. According to the statistics agency, the overall unemployment rate declined from 4.6% in the first quarter to 4.0% in the second quarter. This decline was better than the median estimate of 4.5%. The participation rate increased from 70.40% to 70.50%. In the same period, the labor cost index rose from 0.4% to 0.9% on a qQoQ basis. The employment change increased by 1.0% after rising by 0.6% in the first quarter. These numbers show that the New Zealand economy is doing well which signals that the RBNZ will start hiking interest rates soon.
The Australian dollar was little changed after weak economic data from Australia. According to the statistics agency, the headline retail sales number declined by 1.8% in June after falling by 1.8% in the previous month. Further, sales rose by just 0.8% in the second quarter. At the same time, the services sector showed some contraction in July as the country implemented more lockdowns. According to the Australia Industry Group (AIG), the construction PMI moved from 55.5 in June to 48.7 in July. Separate data by Markit revealed that the services PMI declined from 56.8 to 44.2. These numbers came a day after the Reserve Bank of Australia delivered a relatively hawkish rate decision.
The economic calendar will have some key events today. Markit and its partnering institutions will publish the latest services and composite PMI numbers. In countries like the UK, US, and Europe, the PMIs are expected to remain under pressure because of the new reported wave of Covid. The Eurozone will also publish the latest retail sales numbers. In the US, ADP will release its estimate of the labour market while the EIA will release the latest non-manufacturing PMI data.
NZDUSD
The NZDUSD pair rose to a high of 0.7058, which was the highest level since July 8. On the four-hour chart, this price is along the upper line of the Bollinger Bands. It has also moved above the 25-day moving average while the histogram of the MACD has moved above the neutral line. The price has also moved above the descending trendline. Therefore, the pair will likely keep rising as bulls target 0.7100.
EURUSD
The EURUSD pair was little changed at 1.1870. This price was slightly below last week’s high of 1.1905. On the hourly chart, the pair has formed a bullish pennant pattern. Oscillators like the MACD and the RSI are at the neutral level. It is also at the 25-day moving averages. Therefore, the pair will likely keep rising as bulls target the upper side of the pennant at 1.1890. It will then have a bullish breakout ahead of the US jobs data.
AUDNZD
The AUDNZD pair declined sharply after the latest New Zealand jobs data. On the 4 hour chart, the pair declined below the important support at 1.0520. This price was at the lower side of the bearish flag pattern. It has also moved below the 25-day moving average while the Relative Strength Index (RSI) has declined to the oversold level. Therefore, the pair will likely maintain the bearish trend as the economic divergence between New Zealand and Australia emerges.
