NZD/USD: Trading the New Zealand Employment May 2013

The  New Zealand  Employment Change indicator is an important leading indicator which often has a significant impact on the markets. Employment Change is released together with the Unemployment Rate. A reading  which  is better than the market  forecast is bullish for the New Zealand dollar.

Here are the details and 5 possible outcomes for NZD/USD.

Published on Wednesday at 22:45 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. The release of the employment change indicator is highly anticipated by the markets, and can have a significant impact on the movement of NZD/USD.

Employment Change has posted declines for the  past three quarters, pointing to weakness in the  employment market.  However, the  markets are  anticipating a much better reading for Q1, with  an  estimate of 1.1%.  The previous reading came in at a disappointing 0.2% increase, well below the market forecast of 0.5%.   The markets are   expecting an improvement, with a February forecast of 0.4%. Will the indicator be able to meet or beat the market’s prediction?

Sentiment and Levels

New Zealand  benchmark interest  is at 2.50%, helping make the kiwi attractive to investors.  New  Zealand posted some  strong numbers in April –  the trade surplus easily beat the estimate,  and the  Manufacturing Index was solid.   So, the overall sentiment is  bullish on NZD/USD towards this release.

Technical levels from top to bottom: 0.90, 0.8842,, 0.8470, 0.8360,  81.75 and 0.81.

5 Scenarios

1. Within expectations:  0.8% to 1.4%: In this scenario, NZD/USD could show some slight fluctuation, but it is likely to remain within range,  without breaking any levels.
2. Above expectations:  1.5% to 1.8%: A reading above expectations would be an indication  of expansion in the economy,  and could  push the pair  above one  resistance level.
3. Well above expectations: Above 1.8%: A sharp rise in employment  numbers could propel  NZD/USD upwards, and two or more resistance  lines could be broken.
4. Below expectations: 0.4% to 0.7%: A lower than expected reading could pull the pair downwards, with one support level at risk.
5. Well below expectations: Below 0.4%: A very  poor reading will hurt confidence in the kiwi, and NZD/USD could break two  or more support levels.

For more on the kiwi, see the  NZD/USD forecast.

To follow this event live:     [do action=”calendar-event” eventid=”f2af8bc5-5643-4009-9eb5-b85ec5435a3b”/]