Friday Trades: EUR/USD, USD/JPY, and Gold
The overall market sentiment is risk-on. The S&P 500 index (US 500) is getting close to the all-time high. Oil is recovering quickly from its recent losses.
NZD: will it see an upsurge?
What
New Zealand’s quarterly employment change and unemployment rate indicators are coming today, at 23:45 MT time. Same as NFP for the US, they are central in reflecting the pace of economic expansion in the country. That’s why these releases affect the NZD, which may be traded with NZD/USD, NZD/JPY, NZD/CHF, and NZD/CAD.
Strategic
Higher employment and lower unemployment rates indicate more workplaces created in the industry and more people successfully obtaining them. Generally, it results from more demand for work within the industry, which in turn comes from a brighter outlook and more expansive plans on behalf of the businessmen and investors. These are affected by macroeconomic factors and reflect the economic status of the country as a whole.
Tactical
Business owners adjust their plans according to the predicted customer demand and other economic factors, internal to the country. These are the people who have first-hand information about how things are going in the industry. Hence, the change in their plans is the first thing to react to favorable or unfavorable internal economic environment.
Cross-market
Better-than-expected job data reflects the better-than-thought business outlook on behalf of the business owners. That, in turn, creates more-than-expected demand for the corresponding currency in expectation of stronger business performance in the future. Then, the market works on it as a self-propelling mechanism, unless and until negative factual performance or pessimistic outlooks are reported later on. Therefore, strong jobs data pushes the currency up, and the weak one drags it down.
Reaction
The last data was provided with reference to the Q3 of 2019 in the labor market. The employment rate was at 4.2%, coming a bit higher than the forecast of 4.1%. The employment change was at 0.2%, undershooting the expected 0.3%. Coming as weaker than thought, this jobs data dragged the NZD down a bit, but the overall reaction of the currency was limited and did not see any major trend change.
Forecast
This time, the forecast is 4.2% for the unemployment rate and 0.2% for the employment change. If the indicator is better than this, the NZD should get stronger against its counterparts. Otherwise, it will drop. The extent of the reaction will be defined by how far away the factual levels will be from those expected by the market. LOG IN
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