BTMU FX Strategy Research notes that the main economic data release overnight was the latest employment report from New Zealand which has had limited impact on NZD despite revealing stronger than expected employment growth in Q1.
However, BTMU notes that the report also showed that the expected rebound in earnings growth in Q1 proved more modest than expected following acute weakness recorded in Q4 2016.
Such a backdrop of weak earnings growth, according to BTMU, is one reason why the RBNZ has been signalling that it is not in a rush to begin raising rates in the year ahead.
All in, BTMU concludes that the kiwi’s recent poor performance amidst favorable external conditions for carry trades highlights that there is a high hurdle for further upside.
NZD/USD is trading circa 0.6912 as of writing.
Source: BTMU Research
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