NZD/USD: Trading the New Zealand jobs November 2011

The New Zealand employment change indicator, which is released quarterly, provides the earliest indication of the employment situation. The importance of employment numbers, coupled with their publication early in the month could have a significant impact on NZD/USD.

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

Published on Wednesday at 21:45 GMT.

Indicator Background

Job creation is an important leading indicator of overall economic activity, and of consumer spending in particular. Analysts carefully review the Employment Change and Unemployment Rate indicators, which are released simultaneously  and provide critical employment figures.

The previous Employment Change reading, which came in exactly as forecast at 0%, clearly was not a market-mover. The November forecast calls for a modest increase of 0.6%. Will the markets again be on the money with this forecast? A reading that is higher than what the markets are predicting is bullish for the New Zealand dollar.

Sentiment and Levels

The New Zealand dollar reached highs against its US counterpart which have not been seen since September.  However, economic indicators remain flat, and it is seems unlikely that the kiwi will continue its impressive rise against the greenback. Thus, the overall sentiment is neutral on NZD/USD towards this release.

Technical levels from top to bottom: 0.8240, 0.8160, 0.8090, 0.7975, 0.7895, 0.7825 and 0.7764.

5 Scenarios

1. Within expectations: 0.4% to 0.8%: In this scenario, NZD/USD could show some slight movement, but it is likely to remain within range, not breaking any levels.
2. Above expectations: 0.9% to 1.2%: A reading above expectations would be a welcome positive sign for the New Zealand economy, and could send the pair above one resistance level.
3. Well above expectations: Above 1.2%: A sharp rise could trigger a rally, and two levels of resistance could be broken.
4. Below expectations: 0.1% to 0.3%: A reading lower than expected could push NZD/USD downward, with one support level at risk.
5. Well below expectations: Below 0.1%: A reading close to or in negative territory will shake confidence in both the economy and the kiwi, and the pair could break two support levels.

For more on NZD/USD, see the New Zealand dollar forecast.