NZD Gains on Weak US Jobs Data, Election Uncertainty Lingers

The New Zealand Dollar (NZD) has made gains on Friday, rising to around 0.5610 against the US Dollar (USD), up 0.12% for the day.

This increase is largely due to a weaker-than-expected employment report from the United States Bureau of Labor Statistics (BLS), which showed Nonfarm Payrolls increased by only 29K in September, falling short of market expectations of 90K.

The US Dollar Index (DXY) reacted negatively to the release, falling 0.11% to trade near 101.90 at the time of press, while markets now assign around a 22% chance to an interest rate hike in October, down from roughly 64% a week earlier.

However, concerns surrounding the New Zealand election are limiting the NZD's bullish momentum, with opinion polls indicating a tight race and the possibility that Prime Minister Christopher Luxon's coalition could lose power. This change in government could result in several shifts in economic policy, including changes to the central bank's mandate.