Kiwi plumbs two-week trough after disappointing labor data

The New Zealand dollar fell in Asian trade on Wednesday against a basket of major rivals, sharpening losses for the second session against the US counterpart and plumbing two-week lows following negative labor data.

The data reduced the pressures on Reserve Bank of New Zealand’s policymakers and boosted the odds of interest rate cuts this year. 

The Price 

The NZD/USD fell 0.2% today to 0.5875, the lowest since April 19, with a session-high at 0.5903. 

The pair closed down 1.5% on Tuesday, the largest loss since October 2023, away from a three-week high at 59.85 cents. 

The pair lost ground amid risk aversion and following strong US labor and housing data, which hurt the odds of a Fed interest rate cut in the summer. 

The kiwi lost 1.55% against the greenback in April, the fourth monthly loss in a row.  

New Zealand’s Labor Sector

Earlier data showed unemployment up to 4.3% in the first quarter of the year, the highest pace in three years, up from 4.0% in the previous quarter.

The data shows that tight labor conditions are easing in New Zealand, in turn opening the way for the Reserve Bank of New Zealand to start easing policies. 

New Zealand Rates

New Zealand has the highest main interest rate set by a central bank in the G8 region, which underpinned the New Zealand dollar against major rivals.

However following the latest employment data, the central bank is likely to start moving towards rate cuts in upcoming months.