NEW ZEALAND Q2 S/ADJ JOBS GROWTH -0.4 PCT Q/Q (REUTERS POLL -2.0 PCT)

We get a glance at NZ’s labour market today as follows:

• NEW ZEALAND Q2 S/ADJ JOBS GROWTH -0.4 PCT Q/Q (REUTERS POLL -2.0 PCT)
• 04-Aug-2020 16:45:01 – NEW ZEALAND Q2 S/ADJ UNEMPLOYMENT RATE 4.0 PCT (REUTERS POLL 5.8 PCT)
• 04-Aug-2020 16:45:01 – NZ Q2 PARTICIPATION RATE 69.7 PCT (REUTERS POLL 69.8 PCT)
• 04-Aug-2020 16:45:01 – NZ Q2 LCI PRIVATE SECTOR WAGES (EX-O’TIME) +0.2 PCT ON PVS QTR (REUTERS POLL +0.3 PCT)
• 04-Aug-2020 16:45:01 – NZ Q2 LCI PRIVATE SECTOR WAGES (EX-O’TIME) +1.8 PCT ON YEAR AGO (REUTERS POLL +1.9 PCT)

NZD/USD update

 NZD has been holding steady ahead of next week’s MPS, which could be problematic for the bulls.

The NZD has settled into a new “comfort zone” just north of 0.66. While it remains elevated, it is struggling on crosses – even against the AUD after the resumption of QE there and the Victorian virus flare up.

We expect the RBNZ to be very dovish next week and to keep harder hitting unconventional policy options including negative rates and foreign asset purchases on the table, all of which speaks to strong headwinds for the NZD .

Technically the NZD’s key day reversal on Friday was ominous and points to a move lower but some catalyst is needed to speed things up as the USD recovery falters.

Analysts at ANZ Bank explained, adding that that jobs are starting to become more vulnerable as the economic impact of COVID-19 impacts business profitability and confidence to hire staff.