MUFG Research maintains a bullish NZD bias after NZ employment report. MUFG expresses this view via holding a short AUD/NZD targeting a move towards 1.0250.
"The latest employment report revealed that the unemployment rate fell much more sharply than expected by 0.6 point to 4.0% in Q2. It is now far below the RBNZ’s own unemployment rate forecast of 4.7% and is likely close to levels judged as consistent with full employment. The last time the unemployment rate was so low was back in Q3 2018," MUFG notes.
"The tightening labour market which is being exacerbated by closed borders, and building wage pressure will trigger greater concern from the RBNZ...The latest developments overnight have reinforced confidence in our short AUD/NZD trade idea," MUFG adds.