NZD/USD tumbles to near weekly lows around 0.6220 on vulnerable NZ employment data

• NZD/USD has slipped swiftly to 0.6225 as Stats NZ has reported downbeat labor market data.
• The NZ jobless rate has increased to 3.3% while Employment Change has landed at 0%.
• A lower consensus for the US ISM Services PMI could fade the DXY’s rally.

The NZD/USD pair has witnessed a steep fall as Stats NZ has reported vulnerable NZ employment data. The Unemployment Rate has increased to 3.3% from the estimates of 3.1% and the prior release of 3.2%. Also, the Employment Change for the second quarter has landed at 0%, significantly lower than the estimates of 0.4% and the prior print of 0.1%.

Kiwi economy’s failure in creating employment opportunities is going to create more troubles for the Reserve Bank of New Zealand (RBNZ). This will force RBNZ Governor Adrian Orr to go light on policy tightening due to the unavailability of fundamental support from the labor market. However, the Labor Cost Index has improved significantly to 1.3%, much higher than the expectations of 1.1% and the former print of 0.7% on a quarterly basis.

Meanwhile, the US dollar index (DXY) has recovered some of its losses after a juggernaut rebound on Tuesday. The asset picked bids after printing a fresh three-week low at 105.05 as investors underpinned the risk-aversion theme on escalating US-China tensions over Taiwan. US House Speaker Nancy Pelosi supported the Taiwanese local government despite the death threats from China on her personal visit to Taiwan.

Going forward, the US Institute of Supply Management (ISM) will release the Services PMI data.  As per the market consensus, the Services PMI will land at 53.5, significantly lower than the prior release of 55.3. Apart from that, the US ISM Services New Orders Index data holds key importance as US big tech companies have lowered their guidance for the rest of the year. Also, they have ditched their recruitment process.