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NZD/USD Falls To 0.6140 In Response To New Zealand Employment Data And a US Credit Rating Reduction
NZD/USD is currently trading at 0.6142, down 0.12% on the day. Fitch lowered the credit rating of the United States government from AAA to AA+. The New Zealand Unemployment Rate for the second quarter came in at 3.6%, compared to 3.5% as expected and 3.4% previously. Investors will concentrate on the headline rating cut and US ADP employment data.
During Wednesday's early Asian session, the NZD/USD pair extends its decline and edges lower towards the 0.6140 level. The pair is under pressure as a result of the New Zealand employment data for the second quarter and the news surrounding the US rating cut.
Fitch lowered the United States government's credit rating from AAA to AA+ on Tuesday. The leading rating agency cites an anticipated fiscal deterioration over the next three years and a high level of general government debt as the primary reasons for this radical action. According to Reuters, US Treasury Secretary Janet Yellen strongly disagreed with Fitch's decision to downgrade the US government's credit rating, calling it "arbitrary and based on outdated data."
The market participants become cautious and continue to focus on the US rating downgrade headline. This report may put pressure on the US Dollar by heightening concerns over the US debt ceiling crisis.
In June, the US Bureau of Labour Statistics (BLS) reported that JOLTS Job Openings totaled 9.58 million. This reading followed May's 9.82 million openings and was below the 9.62 million market consensus. In the interim, the ISM Manufacturing PMI rose to 46,4 from 46 in July, but fell short of expectations of 46,8.
According to the most recent data from Statistics New Zealand, the unemployment rate in New Zealand for the second quarter was 3.6%, exceeding both the consensus estimate of 3.5% and the previous rate of 3.5%. Employment Change Quarter-to-Quarter increased 1.0%, exceeding expectations of 0.5% and the prior increase of 0.8%. In addition, the quarterly change in the Labour Cost Index decreased to 1.1% from 1.2% expected and 0.9% previously. The participation rate increased to 72.4% in Q2 compared to the predicted 72.0%. Following the publication of mixed New Zealand data, the New Zealand dollar experiences some follow-through selling and falls to 0.6140.
In the absence of top-tier economic data from New Zealand later this week, market participants will transfer their attention to the ADP employment data from the United States, which will be released later in the day. In addition, on Thursday and Friday, respectively, the US ISM Service PMI and Nonfarm Payrolls will be released. These events could have a significant impact on the dynamics of the US Dollar and provide distinct direction for the NZD/USD pair.
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