NZD/USD attracts some sellers below 0.5900 following New Zealand employment data
- NZD/USD remains under some selling pressure around 0.5880 on Wednesday.
- The New Zealand Unemployment Rate in Q1 2024 climbed to 4.3% from 4.0% in Q4.
- Traders will monitor the Fed rate decision on Wednesday, with no change in rate expected.
The NZD/USD pair attracts some sellers near 0.5880 on Wednesday during the early Asian session. The Kiwi edges lower following the worse-than-expected New Zealand employment data. Additionally, the cautious mood in the market ahead of the US Federal Reserve's (Fed) interest rate decision on Wednesday remains to underpin the Greenback for the time being.
The unemployment rate in New Zealand rose sharply in the first quarter of this year as the economy suffered an extended recession amid high-interest rates conditions. Statistics New Zealand revealed on Wednesday that the nation’s Unemployment Rate climbed to 4.3% in Q1 from 4.0% in Q4, compared to the market estimation of 4.2%. Meanwhile, Employment Change figure declined by 0.2% in Q1 from a 0.4% rise in the previous reading, worse than the expectation of a 0.3% increase.
The rise in the jobless rate might convince the Reserve Bank of New Zealand (RBNZ) to hold the rate high for a longer period to cool inflation. Markets expect the RBNZ to maintain a restrictive Official Cash Rate, and rate cuts are unlikely to be delivered until 2025.
On the other hand, the US Fed is widely expected to leave rates unchanged in its current 5.25%–5.50% range on Wednesday. The recent hotter-than-expected inflation and robust US economic data triggered speculation that the US central bank might delay the interest rate cut. Investors will keep an eye on the tone of the FOMC statement and press conference. Any hawkish comments from the Fed might strengthen the Greenback and attract more inflows, while the dovish tone might exert some selling on the USD and create a tailwind for the NZD/USD.