New Zealand Dollar, NZD/USD, Covid, NZ Jobs Report -Talking Points
- NZD/USD launches higher after New Zealand post a stellar first quarter jobs report
- Wall Street ends lower as technology shares drag sentiment lower
- Treasury Secretary Yellen says rates may need to rise, market unclear on meaning
BREAKING NEWS: NZD/USD GAINS ON UPBEAT NEW ZEALAND JOBS REPORT
Sentiment may have a chance to recovery Wednesday following a better-than-expected jobs report out of New Zealand. According to the DailyFX Economic Calendar, New Zealand reported an employment change of 0.6% quarter-over-quarter versus an expected 0.3% for the three months ending March. The unemployment rate fell to 4.7% versus the 4.9% forecast. The better-than-expected print could further reduce the RBNZ’s dovishness on policy moving forward.
New Zealand’s job report was preceded by a financial stability report from the Reserve Bank of New Zealand (RBNZ), which stated the island nation’s economy has fared better than initially forecasted. Although the report did also note that vulnerabilities in the financial system persist. Elsewhere, The Australian Dollar received some positive news through an upgraded final services PMI print for April, rising to 58.8 from 55.5 in the preliminary reading.
Wednesday’s Asia-Pacific Outlook
Asia-Pacific markets may still move lower following a gloomy Tuesday on Wall Street that saw technology stocks lead indexes lower. Asia-Pacific markets may get off to a rough start if the downbeat sentiment on Wall Street cascades into broader sentiment. The Nasdaq 100 index (NDX) sank nearly 2%, and the market’s fear gauge VIX index recorded a gain of about 6.4%. The selloff stemmed from US Treasury Secretary Janet Yellen's commentary, stating rates may have to rise to prevent the economy from overheating.
The comments from the Treasury Chief are in direct conflict with recent Fed talk, but some believe she was referencing market interest rates and not the Federal Reserve’s benchmark rate used to spur or slow economic growth. Nonetheless, the market reaction shows just how sensitive investors are to any proposed rate increases.
The US Dollar also took notice of Ms. Yellen’s comments, pushing the DXY higher. Risk-sensitive currencies were overly impacted, however, with the Australian Dollar and New Zealand Dollar both sinking near a full percentage point versus the Greenback. Treasury markets were not spared from the seemingly hawkish comments from the former Fed Chair, which pushed yields lower on the longer-dated side of the curve.