- NZ dairy auction showed 9.3% drop in prices
- NZ employment up by 0.3% vs. 0.5% forecast in Q2 2015
- NZ jobless rate climbed from 5.8% to 5.9%
- Australia’s AIG services index improved from 51.2 to 54.1
- Chinese Caixin services PMI up from 51.8 to 53.8 in July
- Swiss CPI and UK services PMI lined up
Poor Kiwi just can’t catch a break, can it? New Zealand printed another round of weak economic figures in the wee hours of the Asian forex trading session, spurring speculations of yet another RBNZ rate cut. The quarterly employment change report showed a mere 0.3% uptick for Q2 2015, lower than the projected 0.5% increase, while the previous period’s reading was downgraded from 0.7% to 0.6%. As expected, the jobless rate climbed from 5.8% to 5.9% even with a downturn in labor force participation.
This followed the dismal Global Dairy Trade auction, which indicated a 9.3% drop in the dairy index. Because of that, several financial institutions in New Zealand predicted more downgrades in Fonterra milk payout forecasts, which would mean lower revenues for farmers and dairy producers.
NZD/USD is down 18 pips (-0.28%) and is edging close to the .6500 handle while NZD/JPY is down 20 pips (-0.24%) and is nearing 81.00. The Kiwi also weakened to its European forex rivals, with EUR/NZD up by 20 pips (+0.12%) and GBP/NZD up by 30 pips (+0.13%).
The Aussie got wind of better than expected data, with Australia’s AIG services index improving from 51.2 to 54.1 and China’s Caixin services PMI climbing from 51.8 to 53.8. Despite that, AUD/USD is down 27 pips (-0.37%) to .7350 and AUD/JPY is down 35 pips (-0.38%) below 91.50.
Up ahead, the U.K. will have its turn to release its services PMI at 9:30 am GMT. While forex traders are sitting tight ahead of Super Thursday, this PMI report could still spur enough volatility since the services sector accounts for majority of overall economic activity in the United Kingdom. Analysts are expecting to see a dip from 58.5 to 58.1, which would reflect a slower pace of expansion for July.
Euro pairs could also see a bit of forex action on the release of final services PMI readings from the region’s largest economies. Positive revisions could allow the shared currency to recover, even as the Greek stock market tumble is currently dampening its gains, while downgrades could spur further losses for the euro. Keep an eye out for the Swiss CPI release at 8:15 am GMT as well since this could mean more franc weakness if the actual figure comes in worse than the projected 0.4% decline.
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