Analysts at Westpac expect the labour market surveys to indicate some modestly positive outcomes. Even though the tourism industry took a hit from COVID-related enforced border closures, the job market has been resilient. Job ads are also said to be rising, indicating that labour demand was rising. However, the report will show if this has translated into increased hiring or not.
Trade Plays on the NZD/USD
The NZD/USD is the currency pair of choice for trading this report. The Kiwi could get some bullish impetus if the employment change comes in at 0.4% or higher, while the unemployment rate reduces or stays static at 4.9%. A gain above 0.6% will produce a more significant response on the NZD/USD, but an increase of 0.4% – 0.5% may produce a muted bullish response. In these cases, bulls would be looking for a buy opportunity to ride a potential bounce from 0.71318 towards the 0.72000 psychological resistance (Tuesday’s intraday high). Above this level, 0.73084 is an additional target, with 0.72693 (16 February, 18 March, and 28 April highs) serves as a potential pitstop.
On the flip side, an employment change of 0.2% or below, with a static or unemployment rate of 5.0% or more, could induce further weakness on the pair. Sellers would seek a breakdown of the 0.71318 support, with a focus on the 0.71004 psychological support as the immediate target. A further decline introduces 0.70541 and 0.70009 as additional downside targets.