• NZD/USD advances after a weaker-than-expected US employment report.
• US job creation slows sharply in June, reinforcing expectations of Fed policy hold.
• BNY notes that the RBNZ will maintain a six-member MPC ahead of its July 8 meeting.

NZD/USD rises 0.59% on Thursday to trade around 0.5705 at the time of writing, supported by a sharp decline in the US Dollar (USD) following the release of a significantly weaker-than-expected US employment report.

Data released by the Bureau of Labor Statistics (BLS) showed that Nonfarm Payrolls (NFP) increased by only 57K in June, well below the market consensus of 110K. May's reading was revised down to 129K from 172K previously, while April's figure was also revised lower to 148K from 179K, resulting in a combined downward revision of 74K jobs. Meanwhile, the Unemployment Rate unexpectedly declined to 4.2% from 4.3%, while the Labor Force Participation Rate fell to 61.5% from 61.8%. Annual wage growth, as measured by Average Hourly Earnings, accelerated slightly to 3.5%, in line with expectations.

Markets are nevertheless focusing on the weak headline payroll figure, reinforcing expectations that the Federal Reserve (Fed) could adopt a less hawkish monetary policy over the coming months. This outlook weighs on the US Dollar and supports rival currencies, including the New Zealand Dollar (NZD).

On the New Zealand side, domestic developments are also providing support to the currency. According to BNY, the Reserve Bank of New Zealand (RBNZ) will maintain a six-member Monetary Policy Committee (MPC) until the November election, following a split 3-3 vote at its May meeting. The bank also noted that May building consent data showed a monthly decline in new approvals but a 19% increase on an annual basis, highlighting that residential activity remains resilient ahead of the July 8 monetary policy decision.