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The employment situation in New Zealand, no matter how you look at it, and the improvement also exceeded expectations.

The great data could bring forward rate hikes by the RBNZ and has already pushed NZD/USD higher, back to the uptrend channel that it lost recently. Can it challenge the highs of 2013?

The employment change figure rose by an impressive 1.2%, triple the rise in Q2 and far better than 0.5% that was expected. Year on year, New Zealand enjoyed a gain of 2.4%. The unemployment rate fell from 6.4% to 6.2% as expected.

In addition, it is important to note that the unemployment rate dropped despite a strong rise in the participation rate: New Zealand enjoys a participation rate of 68.6% now, higher than 68% in Q3. For reference, the participation rate in the US stood on 63.2% in September.

The average hourly earnings and private wages all rose, and this could put pressure for a rate hike.

NZD/USD

NZD USD higher November 6 2013 after excellent employment data in New Zealand technical chart for currency tradingAs the chart shows, NZD/USD is now back in the uptrend channel that accompanied it since October. The pair lost support recently, surrendering to surging US dollar and to the dissatisfaction of the Reserve Bank of New Zealand with the value of NZD.

While the strong exchange rate hurts exports, it might be essential to curb a potential rise in inflation. It will be hard for the RBNZ to continue talking down the currency.

So, NZD/USD was sitting above 0.8270 before the publication, and broke the important line of 0.8360 afterwords.

The next line of resistance is 0.8435, followed by the round number of 0.85. The year’s highs are at 0.8676. Is the pair up for the challenge?

For more, see the NZD/USD forecast.