NZD/USD drops to 0.6140 following New Zealand employment data, US rating cut
- NZD/USD attracts some sellers, currently trades around 0.6142, losing 0.12% for the day.
- Fitch downgraded the United States government’s credit rating from AAA to AA+.
- The New Zealand Unemployment Rate for Q2 came in at 3.6%, versus a consensus of 3.5% and 3.4% prior.
- Investors will focus on the US rating cut headline and US ADP employment data.
The NZD/USD pair extends its downside and edges lower to the 0.6140 mark during the early Asian session on Wednesday. The pair faces some pressure following the New Zealand employment data for Q2 and the headlines surrounding the US rating cut.
On Tuesday, Fitch downgraded the United States government’s credit rating from AAA to AA+. The leading rating company cites an expected fiscal deterioration over the next three years and a high general government debt burden as the primary reasons for this drastic action. US Treasury Secretary Janet Yellen expressed her strong disagreement with Fitch’s decision to downgrade the US government’s credit rating, calling it “arbitrary and based on outdated data”, according to Reuters.
Market participants turn cautious and remain focused on the US rating cut headline. This report fuels concern about the US debt ceiling crisis and might exert pressure on the US Dollar.
On Tuesday, the US Bureau of Labour Statistics (BLS) reported that JOLTS Job Openings came in at 9.58 million in June. This reading followed May’s 9.82 million openings and was below the market consensus of 9.62 million. Meanwhile, the ISM Manufacturing PMI increased to 46.4 from 46 in July but was below the expectation of 46.8.
The latest data from Statistics New Zealand revealed that the New Zealand Unemployment Rate for Q2 came in at 3.6%, above the consensus of 3.5% and 3.4% prior. Employment Change QoQ rose 1.0%, better than expected at 0.5% and 0.8% previously. Additionally, the Labour Cost Index QoQ declined to 1.1% versus 1.2% forecast and 0.9% prior. The participation rate in Q2 improved to 72.4%, against an estimation of 72.0%. Following the mixed New Zealand data released, the Kiwi faces some follow-through selling and drops to 0.6140.
In the absence of top-tier economic data released from New Zealand later this week, market participants will shift their focus to the US ADP employment data due later in the day. Also, the US ISM Service PMI and Nonfarm Payrolls will be released on Thursday and Friday, respectively. These events could significantly impact the US Dollar’s dynamic and give the NZD/USD pair a clear direction.