New Zealand Dollar Falls to 0.5539, Its Lowest Level in 19 Months
Key Facts
The New Zealand dollar-U.S. dollar pair touched 0.5539 during Friday’s session, November 6, marking its lowest level in 19 months, after falling below previous lows near 0.5560, according to an FXStreet report. The report described trading as near the 0.5540 area. The decline came as the U.S. dollar outperformed major currencies amid safe-haven demand and anticipation of the U.S. jobs report. FXStreet added that investors were expecting a strong nonfarm payrolls report later in the day. These factors put the New Zealand currency under pressure as the release of data that could influence trading direction approached.
FXStreet attributed part of the hedging demand for the dollar to a decline in global equity markets and concerns related to the U.S. midterm election results. The report said investors feared that a Democratic victory could lead to tighter regulation of the artificial intelligence sector and slow plans to build data centers. Against this backdrop, the Associated Press reported that the Nasdaq was down 11% from its record high through Thursday, November 5. The agency linked this to concerns that data center construction could slow as borrowing costs rise. It also said that 32 of the 34 winning candidates for governor in races decided supported stronger regulation or restrictions on data centers, and that 12 backed a ban or temporary moratorium.
In New Zealand, the unemployment rate rose to 5.7% in the third quarter from 5.6% in the previous quarter, while market expectations pointed to a decline to 5.5%, according to FXStreet. The report also noted an unexpected fall in net employment. The figures followed a larger-than-expected slowdown in consumer inflation during the third quarter. FXStreet said this may have contributed to the Reserve Bank of New Zealand’s decision to leave interest rates unchanged the previous week. Weak labor data, together with the inflation trend and the latest rate decision, adds to domestic pressure on the currency.
U.S. data released ahead of the jobs report showed initial jobless claims fell to 189,000 in the week preceding the November 5 report, from 195,000 in the week before, according to the Associated Press. The four-week average of claims also declined to 194,750. The agency said the reading of 189,000 was the lowest since mid-July. Markets are awaiting the October report alongside these weekly indicators and estimates for employment and unemployment. The jobs report remains the dollar’s immediate focus, after expectations for a strong reading boosted demand for the U.S. currency.
Ahead of the report’s release, a FactSet survey forecast the addition of 65,000 jobs in October and the unemployment rate holding at 4.2%, according to the Associated Press. FXStreet reported that expectations for nonfarm payrolls stood at 65K, compared with a previous reading of 29K for September. The U.S. Bureau of Labor Statistics scheduled the release of its October employment situation report for November 6 at 08:30 a.m. Eastern time. FXStreet cited a scheduled release time of 13:30 GMT the same day. These anticipated figures were the markets’ next milestone after the pair fell to its lowest level in 19 months.
Moves in other currencies reflected the dollar’s broader strength in Friday trading, with it rising to 158.26 yen from 157.68 yen the previous day, according to the Associated Press. By contrast, the euro fell to $1.1172 from $1.1219. Asian stock markets recorded sharp losses in the same session: the Nikkei 225 fell 6.0% to 57,434.77, and the Kospi declined 6.0% to 5,059.69. Currency and equity moves came amid risk aversion cited by FXStreet. With the U.S. jobs data pending, markets continued to weigh expectations for a strong labor market against risks of slowing activity tied to borrowing costs and concerns about the technology sector.