The New Zealand dollar had its worst day in more than a year after the country’s statistics office released the employment numbers for the fourth quarter. The numbers showed that the unemployment rate jumped to 4.3% from the third quarter’s 3.9%. Investors were expecting the rate to jump slightly to 4.1%.
The participation rate, which measures the people of working age who are currently working or seeking employment rose by 70.90%, which was lower than the third quarter’s 71.10% and the expected 71%.A weaker participation rate is viewed as being bad for the economy.
The Labor Cost Index, which is a measure of the change in price businesses pau for labor excluding overtime, rose by 0.5%. This was lower than the expected 0.6% and unchanged from the third quarter.
The employment change rose by 0.1%, which was lower than the expected 0.3%. It was also lower than the third quarter’s 1.1%.
In the past one month, the country has released mixed data. In January, it reported a surprise increase in the trade surplus. It also reported an improvement in inflation, which edged closer to the RBNZ’s target of 2.0%.
Today’s movements appeared to follow what the neighboring Australian dollar is doing. Yesterday, the Aussie declined sharply after the bank revealed that it could lower the interest rates. It caught traders off-guard especially after the interest rates decision on the previous day. Therefore, investors believe that the RBNZ could also cut rates or delay the previously announced hike.
The NZD/USD dropped to a low of 0.6748, which was along the 63.8% Fibonacci Retracement level. At the same time, the Relative Vigor Index, which is an oscillator that measures volatility fell sharply. Therefore, while the downward movement will continue, the pair could also make some short-term upward movements.