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Risk aversion was the name of the game in early Asian session trading, but traders soon kept calm and traded on as relatively strong reports came out.

  • NZ employment change (q/q) dips by 0.2% vs. 0.7% expected, 1.1% growth in Q1 2017
  • NZ unemployment rate (q/q) edges lower as workers leave labor force
  • NZ labor cost index (q/q) up by 0.4% vs. 0.5% expected, 0.6% previous
  • U.K. BRC shop price index (y/y) slips by 0.4% vs. 0.3% decline in June
  • Australia’s building approvals jumps by 10.9% in June vs. 1.2% expected, 5.4% decline in May

Major Events/Reports:

New Zealand’s jobs data

Kiwi started the trading session on a weak note after New Zealand’s jobs report printed surprising headline numbers.

Unemployment rate in New Zealand dipped from 4.9% to 4.8% in Q2 2017, the lowest in more than eight years ago when the financial crisis started. Market players weren’t impressed, however.

For one thing, the number of unemployed – those available to work, and who had either actively sought work or had a new job to start within the next four weeks – fell by three thousand, which would’ve been a good thing if the number of employed workers hadn’t also fallen by 0.2% when analysts had been expecting a 0.7% uptick.

This means that the decline in unemployment rate is mostly due to workers giving up on finding jobs. True enough, the labour force participation rate dipped from 70.6% to 70.0% during the June quarter.

Another troubling detail is wage growth, which remains subdued with a 0.4% quarterly growth and a 1.6% annualized growth.

The surprising weakness of job growth and the sluggish wage inflation both point to the RBNZ keeping its rates accommodative when it meets next week.

Australia’s building approvals

Data from Australia printed today saw building approvals rising by a whopping 10.9% in June. Not only is this higher than the 1.2% uptick expected, but it also marks the fastest pace of approvals in eleven months.

According to ABS, the growth was mostly “driven by a rise in total dwellings excluding houses.” In annualized terms, building approvals dipped by 2.3%, which is a lot softer than the 18.7% drop in May.

Major Market Mover(s):

NZD

The New Zealand dollar plummeted against its major counterparts after New Zealand printed surprisingly weak employment reports.

NZD/USD is down by 43 pips (-0.58%) to .7426, AUD/NZD is up by 45 pips (+0.42%) to 1.0709, and NZD/JPY dipped to a low of 81.89 before retracing back to 82.18.

Watch Out For:

  • 5:00 am GMT: Japan’s consumer confidence (43.5 expected, 43.3 previous)
  • 5:45 am GMT: Switzerland’s SECO consumer climate (-3 expected, -8 previous)
  • 7:00 am GMT: Spain’s unemployment change (-66.5K expected, -98.2K previous)
  • 7:15 am GMT: Switzerland’s retail sales (y/y) (1.3% expected, -0.3% previous)
  • 7:30 am GMT: Switzerland’s manufacturing PMI (58.9 expected, 60.1 previous)
  • 8:30 am GMT: U.K. construction PMI (54.3 expected, 54.8 previous)
  • 9:00 am GMT: Euro Zone PPI (-0.1% expected, -0.4% previous)