AUD/NZD marching towards 1.0400 after positive NZ economic data

• New Zealand Unemployment Rate fell 0.5%, down to 3.4%.
• Australian PMI’s figures were better than expected, though overshadowed by the NZ employment numbers.
• AUD/NZD dipped to 1.0417 on the release of the NZ employment figures.

As the Asian session begins, the AUD/NZD slumps 0.15% during the day, trading at 1.0430 at the time of writing. Better than expected macroeconomic data out of New Zealand and Australia is the driver of the session, favoring the prospects of the New Zealand dollar.

New Zealand Unemployment Rate fell 0.5%, down to 3.4%, matching 2007 record low

On Wednesday, Statistics of New Zealand revealed employment figures for the third quarter. Employment Change rose by 2%, higher than the 0.4% estimated, whereas the Unemployment Rate for the same period increased to 3.4%, better than the 3.9% foreseen by analysts. 

“The number of unemployed fell by 18,000 over the quarter to 98,000, which, combined with 54,000 more people in employment, drove the unemployment rate down,” Statistics of NZ said.

The drop in the unemployment figure would likely exert pressure on the RBNZ to raise rates faster, after a jump in inflation to 4.9% in the September reading.

At the same time, the RBNZ Governor Adrian Orr was hosting a media conference on financial stability, as the employment figures crossed the wires, declining to comment on the implications for monetary policy. He said that “labor market data, and economic data in general, was highly volatile at present.”

In the meantime, the Australian economic docket featured Markit PMI’s for October. The Services PMI came at 51.8 versus a 45.5 in September. For the same period, the Markit Composite PMI expanded to 52.2, higher than the 46.5 seen in the previous month. 

FX Market Implications

The AUD/NZD dropped 36 pips, from 1.0453 to 1.0417, once New Zealand employment figures crossed the wires.