The NZD/USD pair is attracting some sellers near the 0.5620 level during the Asian trading hours on Friday. The New Zealand Dollar (NZD) has weakened against the US Dollar (USD) following a narrowing of China’s trade surplus in October and a disappointing New Zealand jobs report. Traders are also bracing for the flash U-Mich Consumer Sentiment survey scheduled for later on Friday.
Data released by the General Administration of Customs of the People’s Republic of China showed that China’s trade surplus narrowed to $90.07 billion in October, down from $90.45 billion previously. This figure fell short of the forecasted $95.60 billion. Meanwhile, exports rose by just 1.1% year-over-year in October, missing expectations for a 3.0% gain. Imports increased by 1.0% year-over-year, a sharp decline from 7.4% in September and below the market consensus of 3.2%.
The narrowing of China’s trade surplus could weigh on the New Zealand Dollar, often seen as a proxy for China, given that China is one of New Zealand’s major trading partners.
Adding to the NZD’s weakness, New Zealand’s unemployment rate climbed to 5.3% in the third quarter (Q3), marking its highest level since 2016. This weak jobs report has strengthened the case for a rate cut by the Reserve Bank of New Zealand (RBNZ) this month, putting additional selling pressure on the NZD. Most economists now expect a 25 basis points (bps) reduction at the RBNZ’s final meeting of the year, scheduled for November 26.
On the US side, Challenger jobs data indicated a sharp increase in job cuts, suggesting a possible cooling in the US labor market. The report revealed that companies cut over 150,000 jobs in October, marking the biggest reduction for the month in more than 20 years.
Following the release of the Challenger jobs data, traders have ramped up bets on a rate cut in the US, which has weighed on the Greenback against the NZD. Trading in Fed funds futures now implies a 70% probability of a rate reduction at the Federal Reserve’s next meeting, up from 62% a day earlier, according to the CME FedWatch tool.
Overall, the combination of weaker Chinese trade data, a disappointing New Zealand jobs report, and signs of softening in the US labor market is influencing price action in the NZD/USD pair as traders adjust their expectations ahead of key upcoming economic releases.
https://bitcoinethereumnews.com/finance/new-zealand-dollar-drifts-lower-below-0-5650-as-chinas-trade-surplus-narrows-in-october/