February 4, 2020 10:59 AM
New Zealand Employment Data – Does it Matter?
In a few hours, New Zealand will release its Employment Change (QoQ) for Q4. Expectations are for an increase of 0.4% vs 0.2% last. In addition, the Unemployment Rate for Q4 is expected to decrease to 4.1% vs 4.2% last. Expectations are for better data than in Q3, but does it matter? This data is for Q4, 2019. This data was before Phase One of the US-China trade deal was signed and before the outbreak of the Coronavirus. Traders are wondering if there was a pickup in demand for goods and services from China due to the trade deal, therefore putting more people to work. Traders are wondering if the Coronavirus will slow down demand, therefore putting people out of work. We are over a month into the new year, and the employment data released later will be for Q4 2019. Traders must question how much of an affect the employment data will have on the Kiwi.
NZD/USD has been trading lower since the pair put in a Morning Star candlestick formation ( a 3-candle reversal pattern) on December 31st, 2019 with a high near .6755. On January 27th, price gapped lower from .6600 down to .6582. With the continued fears of the spread of the Coronavirus, NZD/USD continued lower and broke through a rising trendline from the September 30th , 2019 low, as well as, the 200 Day Moving Average near .6500. Price now sits at horizontal support, with and oversold RSI that is turning up.
Source: Tradingview, City Index
On a 240-minute timeframe, NZD/USD has recently broken below the 50% retracement from the low on the September 30th to the highs on December 31st at .6482. In addition, we can see more clearly the horizontal support just below near .6435 and the 61.8% retracement level from the previously mentioned timeframe near .6418. There is the 200 Day Moving Average, trendline resistance (on the daily), and horizontal resistance above near .6580, which coincides with the gap from January 27th. The RSI has moved back into neutral territory.
Source: Tradingview, City Index
Price may see a bounce on a relief rally if the data is better, which would give time for the daily RSI to unwind. However, sellers may use a bounce to add to shorts. Given the events that have occurred since Q4, don’t expect any bounce to be long lived because of the employment data.
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