NZDUSD has been moving south for a week. As result of these declines supported also among others by yesterday’s publication of the New Zealand labor market report for the second quarter of 2017, the market broke a significant support at 0.7458, which re-testing as a resistance was rejected .
As we reported yesterday, although the unemployment rate slid as expected to 4.8%, and wages inflation clearly rebounded from 0.3% to 0.8% (0.9% forecast), the dynamics of employment differed strongly from predicted values. Analysts were expecting a slowdown in this case, but not as strong – quarterly negative:
Employment change q/q: -0.2%, forecast 0.7%, previously 1.1% (downward revision from 1.2%)
Employment change YoY: 3.1%, forecast 4.1%, previously 5.7%
According to my yesterday’s projection, re-testing and rejection of the aforementioned level opened the way to further declines, and as a result price also beat the next support 0.7412, which today,due to slight growth re-tests from below (as resistance).
Looking on H1 chart, we notice that first supply reaction has already appeared in this area. So if this resistance is permanently rejected, we could expect continuation of declines for which potential target may be around 0.7375.
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