Ahead of the RBNZ meeting, the New Zealand Dollar was supported by US-China Negotiations. The New Zealand dollar strengthened slightly while the RBNZ meeting was feared to cut interest rates and US-China negotiations again became the focus of the market. The New Zealand Dollar exchange rate recorded a daily gain of around 0.30 percent to around 0.6760 against the US Dollar at the start of the European session on February 11. 

While there was no release schedule for important events from Australia or New Zealand, market participants turned their attention back to trade negotiations between the United States and China. However, the schedule for the Reserve Bank of New Zealand/RBNZ on Wednesday is projected to limit the movement of the Kiwi in a limited range.

US and China Negotiations

US and Chinese negotiators are still struggling to reach a certain trade agreement, before the March 1, 2019 deadline. Previously, investors hoped there would be progress after the visit of Chinese Deputy Prime Minister Liu He to Washington. However, there is no good news that has surfaced so far. In fact, US President Donald Trump revealed that he would no longer meet with Chinese President Xi Jinping before the deadline.

At present, market participants' hopes are focused on the visit of US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin to Beijing this week. If the agreement remains unreachable until March 1, the US is likely to realize plans to increase import tariffs on Chinese products. In turn, it will hit high-risk financial assets such as the New Zealand Dollar and other comdoll partners.

Nich Smyth, an Interest Rate Strategist from Bank of New Zealand said that the global market trading is colored by 'risk-off' during most of Friday, after Trump said he did not plan to meet President Xi before US tariffs for China will be raised (in early March). NZD barely changed in the day (Friday), but NZ interest rates declined again. Yields on 10-year NZ government bonds hit new record lows.

This is because the RBNZ will announce interest rates and other monetary policies on February 13. Although the majority expectation still predicts the RBNZ will not change the current interest rate, the probability of the announcement of the interest rate cut has increased significantly. Didimax offers more news about forex learning, so be sure to check it out if you are interested in forex learning.

New Zealand Employment Data Gloomy, NZD/USD Drops

New Zealand Employment Change data release for the fourth quarter of 2018 disappointed the market. As a result, NZD was depressed versus the USD. New Zealand Employment Change data only posted 2.3% YoY growth, worse than forecast economists who predicted New Zealand employment data would grow 2.6% YoY, whereas in the previous period, the number of workers in this country was able to grow to 2.8% YoY.

The slowdown in job growth in New Zealand was largely triggered by a downturn that occurred during the period of October-December 2018. This was reflected in the q / q Employment Change data which grew 0.1 percent, far worse than the 1.1 percent increase in the previous quarter.

Unemployment Rate Increases Exceeding Expectations

At the same time, the Statistics Department of New Zealand also released data on unemployment rates which rose from 3.9 percent to 4.3 percent during the fourth quarter of 2018. The increase exceeded market expectations beforehand, which predicts that the Unemployment Rate will only rise to 4.1 percent.

Apparently, the New Zealand labor market in the last quarter of last year was facing severe challenges, because the release of other data showed a deteriorating condition. Unmitigated, data such as the labor force participation rate fell 0.2 percent to 70.9 percent during the fourth quarter of 2018. Wages of private sector workers also weakened in the same period last year.