New Zealand’s dollar tumbled more than half a percent after second-quarter employment unexpectedly fell for the first time since 2015.
Spot dealers sold the kiwi on behalf of clients who were long on the currency ahead of the data release, according to foreign-exchange traders who declined to be identified as they are not authorized to speak to the media. New Zealand’s employment change shrank 0.2 percentage points last quarter, missing even the most pessimistic forecast. Local yields fell across a flattening curve, led by the 10-year sector.
“Today’s data should weigh on the NZD ahead of RBNZ’s meeting next week, particularly given the skew in market positioning,” said Peter Dragicevich, a foreign-exchange strategist at Nomura Ltd. in Singapore. "Based on the recent out-turns, near-term inflation forecasts are set to be revised lower, particularly with the NZD TWI continuing to track above its central assumption.”
* NZD/USD declines as much as 0.7% to 0.7416, most since July 18
** 10-year yield drops five basis points to 2.98%
** Options related bids seen ahead of 0.7400 strikes expiring today
** ASB now sees RBNZ raising rates in February 2019 from November 2018 previously
** Employment dropped 0.2% q/q; economists expected 0.7% gain
** First decline in employment since 3Q 2015
Source: Bloomberg Pro Terminal
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