Kiwi pair is bolted higher on stronger than expected New Zealand’s employment data for the second quarter during early Wednesday. Kiwi departed when data showed that New Zealand’s unemployment rate had fallen to 4.0% in the last quarter, under the 4.5% market forecast, while employment was up 0.9%. In addition, RBNZ’s focus on ‘utilization’ has declined from 12.1% to 10.5% in the most recent quarter. The ‘participation rate’ rose to 70.5% from 70.4%.

The increasing heat in the labor market is fueling wage increases, with private sector wages up 0.9% in the quarter and an annual increase of 2.2%. This is ahead of the forecasts of many economists, and is slightly higher than the 2.1% RBNZ expected.

Policy responses to the pandemic caused a strong economic boom from a severe lockdown last March-May, but turned the remote economy New Zealand into a pressure cooker. Strong jobs data confirms the opinion of economists that the Reserve Bank of New Zealand (RBNZ) will raise the official Cash Rate (OCR) when it meets on August 18. ANZ Bank said in a note that “the data said New Zealand has surpassed full employment, and the economy is heating up.”

Wage growth accelerated in the June quarter, registering a 0.9% lift in the Private Sector Labor  Cost Index (LCI), which is higher than the forecast 0.6% increase. Wages were higher than expected, especially as activity in the growing housing market increased and closed borders restricted the supply of labour. The data comes a day after the Reserve Bank of New Zealand (RBNZ) said it was considering new ways to tighten home loan standards to control the housing market.

On the other hand the New Zealand Government has given out millions of dollars in electric vehicle and hybrid rebates in the month since the scheme was launched. It comes as some electric vehicle (EV) dealers are also seeing soaring demand. Figures released to one news channel reveals that 1422 applications for the rebate have been received in the first month. Of those, almost 1200 have been processed and 1047 rebates have been approved – at a total of almost $5.7 million. “I’m seeing a lot more EVs, it’s been increasingly easy to get charge around town, it’s saved me a lot of money on petrol,” hybrid owner Kate Sewell said. One Auckland car dealership has seen an increase in sales by 30 to 40 per cent.

NZD/USD 4 Hour Chart:

Support: 0.6979 (S1), 0.6942 (S2), 0.6922 (S3).

Resistance: 0.7036 (R1), 0.7055 (R2), 0.7092 (R3).

Amidst this unemployment fallen rate and wages increases relishes the kiwi pair into bullish move. We expect a bullish trend for NZD/USD.