Eyes on NFP Report, RBNZ Surprises Markets

April 05, 2023 11:43

The US Nonfarm Payrolls report will draw investors and traders' attention on Friday. The Federal Reserve takes into consideration the NFP reports when evaluating its monetary policy while it’s worth mentioning that NFP figures have consistently been higher than expected in 2023.

The Job Openings and Labour Turnover Survey (JOLTS) by the US Labour Department showed that available positions totalled 9.93 million. This has been the first time the figure has dropped under 10 million since May 2021.

The Reserve Bank of New Zealand (RBNZ) surprised economists by announcing a 50 basis points rate hike. As a result, the New Zealand dollar surged against the US dollar, gaining 0.60% on Wednesday morning.

US Nonfarm Payrolls figures on Friday

The US Bureau of Labour Statistics (BLS) will reveal the Nonfarm Payrolls March figure on Good Friday. Market analysts forecast a figure close to 250,000. It should be noted that in February, nonfarm payrolls came in at 311,000, surpassing expectations for a reading close to 205,000.

It should be noted that the S&P Global composite PMI survey said that the rate of total job creation was the fastest in six months in March.

RBNZ raises rates more than expected

Earlier today, the RBNZ announced its decision to raise borrowing costs by 50 basis points. The board’s decision surpassed economists’ expectations who had forecast a 25 basis points hike. Market analysts at TDS wrote in their report: “The RBNZ surprised the market and hiked the OCR by 50 bps to 5.25%. Credit conditions not tightening sufficiently played a key role in the Bank's decision to hike 50 bps. After today's decision, we retain our 5.50% peak OCR call. We see limited read-through of today's RBNZ decision for other Central Banks.”

The post-meeting statement said that the board discussed 25 and 50 basis point increases. “Committee members observed that inflation is nevertheless still too high and persistent. Committee agreed it must continue to increase the official cash rate (OCR) to return inflation to the 1-3% target and to fulfil its remit,” was noted in the statement.

US Unemployment Rate March report

The US unemployment rate in March is another set of data that will be released on Friday by the BLS. Market analysts expect the unemployment rate to remain unchanged at 3.6%, indicating a tight labour market. The Fed’s “Beige Book” report described the labour market as remaining “solid” in February.

Economists suggest that in order to have a clear overview of the labour market, the U6 unemployment rate data should be scrutinised. The U6 unemployment data includes people who have given up searching for a job or work part-time and can’t find a full-time job.

China Caixin Services PMI March 2023

Markit Economics is expected to release data regarding the Chinese Services PMI in March on Thursday morning. Economists forecast the Services PMI to come in at 54.5, slightly lower than February’s reading.

A report published by UOB noted: “China’s economic recovery continued to gain traction in March, led by the services sector while the manufacturing sector may hold up stronger than initially thought. Employment in both the manufacturing and nonmanufacturing sectors contracted in March while the decline in output/ selling prices may indicate demand weakness and weak profitability. Furthermore, softening external demand and geopolitical tensions continue to pose risk to China’s manufacturing sector.”

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.