After 5 weeks of almost uninterrupted declines, the New Zealand Dollar finally caught a bid overnight, helped by a very good set of Q3 employment numbers. Unemployment for the three months ending September was 4.6 per cent, 0.2 percentage points lower than the prior quarter and the lowest level since the December 2008 quarter, according to Statistics New Zealand.
Surging demand for labour boosted the participation rate to a record 71.1%; a jump of 1.1 percentage points in the quarter whilst wages grew 0.7% in the quarter to take the annual rate of growth up to a five year high of 1.9%. Some of the increase was due to government-mandated pay rise for care workers and the new Labour government was elected with plans to raise the minimum wage more than 25% over the next few years which could also spill over into higher wages elsewhere.
Of course, we don’t know how much of the legislative programme will be enacted and there’s virtually no chance the RBNZ will raise rates next week or be signaling a hike in the near future. For the NZD, though, those falling knives which we talked about yesterday might well now have hit the ground. Maybe it is time at last to buy some cheaper Kiwi Dollars ?