NZD provides fireworks spectacular for traders

NZD provides fireworks spectacular for traders

By Andrew May (Sales Trader, CMC Markets New Zealand)
6 November 2013

If ever there was further evidence required that the NZ economy has indeed hit the floor running, then look no further than today’s third quarter unemployment data. Like a truly spectacular skyrocket whizzing high into the stratosphere, this better than expected NZ jobs data has taken with it - the New Zealand dollar higher - much higher.

Traders already mindful of a cavalcade of imminent data due from US and European heavyweights have been caught very much unawares with the ferocity and timing of the Kiwi’s valiant push skywards. In some sense of disparity we have northern policy makers in full defensive or a continuation of easing rhetoric, whilst southern counterparts dealing with aggressive growth, provide an onus for tightening. Investors truly have their work cut out for themselves wondering which ‘hat’ to wear for the rest of the week: ‘Hawk’ or ‘Dove’, ‘Risk on’ or ‘Risk off’.

The New Zealand dollar, already a solid performer overnight was caught in the wake of the Aussie dollar’s bullish momentum, care of RBA’s no change to monetary policy, which had in fact tested US 83.35 before receding slightly, awaiting the national employment figure. And it didn’t disappoint.

NZ’s unemployment rate fell to 6.2% in the September quarter from 6.4% for the June quarter, which was better than the consensus 6.3% expected. All NZD crosses have had their fuses lit as a consequence with the NZDUSD up 40pts to 83.77 currently trading US 83.62. The NZDAUD finally treading support above that all-important AUD 80c barrier and both NZDEUR and NZDGBP finding respective key supports of EUR 62c and GBP 52p.

So now the question is just how much higher this Kiwi-skyrocket will climb or the momentum to carry it, largely depends on extraneous factors. With more fireworks scheduled in the form of US and Australian jobs numbers, EU and UK asset purchase targets, we could see further propulsion to risk portfolio holdings dependent on how traders interpret the accompanying commentary.

www.cmcmarkets.com

ENDS

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