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Kiwi Rises on Job Data, Loonie Firm on Oil Price, Euro and Franc Weak

Canadian and New Zealand Dollar are both in the driving seats in the markets this week. Return of risk appetite is providing the base for rally. Meanwhile, Kiwi is lifted by stronger than expected job data while Loonie follows oil prices higher. Aussie is lagging behind on RBA, however. Euro and Swiss Franc continue to trade as the weakest ones, with more downside prospect for the near term. Dollar and Yen are mixed for now.

Technically, Sterling is apparently struggling to extend recent rally with much loss in momentum too. 1.3608 support in GBP/USD is a level to watch and break will bring deeper near term pull back. If that happens, we’d also monitor the reaction in EUR/GBP, on whether is would rebound from the current level through 0.8917 resistance to mark short term bottoming. BoE announcement tomorrow could be the trigger for the moves.

In Asia, currently, Nikkei is up 0.64%. Hong Kong HSI is down -0.55%. China Shanghai SSE is up 0.20%. Singapore Strait Times is up 0.61%. Japan 10-year JGB yield is up 0.0026 at 0.059. Overnight, DOW rose 1.57%. S&P 500 rose 1.39%. NASDAQ rose 1.56%. 10-year yield rose 0.028 to 1.105.

New Zealand employment grew 0.6% in Q4, unemployment rate dropped to 4.9%

New Zealand employment grew 0.6% in Q4, better than expectation of 0.0% growth. Unemployment rate dropped back to 4.9%, down from 5.3%, much better than expectation of 5.6%. Though, it’s still higher than the 4.1% unemployment rate reported the same time a year ago. Labor force participation rate rose 0.1% to 70.2%.

Labor costs index rose 1.6% yoy, slowed from Q3’s 1.9% yoy. “In the LCI, we can see that annual wage inflation is slowing as fewer employees have received wage increases,” StatsNZ business prices delivery manager Bryan Downes said. “Over the past year, more than half of the positions surveyed received no wage increase.”

NZD/JPY resumes up trend, targeting 77.07 next

NZD/JPY surges to as high as 75.83 today, following better than expected New Zealand job data. Up trend from 59.49 should have resumed. Further rally is expected as long as 74.11 support holds. Next target is 100% projection of 63.45 to 71.66 from 68.86 at 77.07.

Current rise from 68.86 could be the fifth wave in the five wave sequence from 59.49. Hence, we’d be cautious on loss of upside momentum as it approaches 77.07 and tops around there.

Nevertheless strong break of 77.07 would bring further medium term rise to 61.8% retracement of 94.01 (2015 high) to 59.49 at 80.82.