Robust employment may push Kiwi higher to test 0.69 resistance area

Robust employment was hardly expected from New Zealand, given the economy was facing strong adverse headwinds arising from lower commodity prices such as milk and ill effects of El Nino. After dropping to as low as 5.4% in 2014, unemployment has been rising since and economists were expecting the rate to rise another 0.1% and reach 6.1% in December quarter.

Beating all the expectations and imagination, unemployment rate dropped by 0.7% to 5.3%, which is lowest since the crisis. Employed rose by 0.9% on quarterly basis and unemployed dropped by 10.9% for the quarter. While some part of the gain could be due to drop in participation, which declined by 0.3% for the quarter and 1% from a year ago. Even then, the employment is far robust.

Though the headline growth is superb, wage inflation pose some doubts over the tightness in labour market, which rose by 1.5%, slowest pace since 2010.

Even then, this blockbuster report could push Kiwi, which is best performing currency today, likely to test resistance around 0.69 area.

Kiwi is currently trading at 0.659 against Dollar.