Investing.com – The New Zealand dollar fell on Wednesday during Asian trading despite the country’s employment rate came down to lowest level in five years as the economy steams ahead at a pace the Reserve Bank of New Zealand has said will warrant a rate hike soon.
Data released on Wednesday by Statistics New Zealand showed that country’s unemployment rate fell to 6% in Q4 from 6.2% in previous quarter, and in line with expectations. This is the lowest level since Q2 of 2009. Other data released on Wednesday showed the number of employed people in the country rose to 1.1% in Q4 against an expectation of +0.6% and +1.2% in Q3.
In Australia, the Australian Industry Group (AIG) Services Index rose to 49.3 from 46.1.
In Japan the December cash earnings data will be released at 1030 Tokyo (0130 GMT). Revised wages data released on January 17 showed that the total average monthly cash earnings per regular employee in Japan rose 0.6% from a year earlier in November, the first y/y rise in five months after -0.1% in October, led mostly by overtime. But base wages slumped 0.6% on year, the 18th straight y/y drop.
USD/JPY rose 0.07% at 101.71, AUD/USD fell 0.13% at 0.8913, while NZD/USD fell 0.24% at 0.8223.
On Tuesday the greenback gained ground against most major currencies after investors viewed the currency as oversold in wake of Monday's selloff stemming from a poor U.S. factory report.
The ISM’s manufacturing purchasing managers’ index came in at 51.3 in January, down from 57.0 in December. Analysts were expecting the index to inch down to 56.4 in January.
The report added new order growth fell at its fastest rate in 33 years, with the new orders index dropping to 51.2 from 64.4 in December. The employment index fell from 55.8 in December to 52.3, the weakest since June.
The soft numbers reminded investors that the Federal Reserve will trim its USD65 billion monthly bond-buying program on a gradual basis, or even leave it on hold if need be, while policy tightening remains far off on the horizon.
Stimulus tools tend to weaken the dollar by suppressing interest rates to spur recovery.
On Tuesday, however, the dollar regained ground, especially on sentiments that harsh winter weather may have played a role in the economic indicator's poor showing, though capping gains were fears that winter storms notwithstanding, the U.S. economy still may be facing a soft patch.
Elsewhere, the Commerce Department reported on Tuesday that U.S. factory orders fell 1.5% in January, better than expectations for a decline of 1.7%.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.01% at 81.22.
On Wednesday, the U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. Meanwhile, the ISM is to publish a report service-sector activity.