The New Zealand dollar slipped to around $0.561 on the first trading day of November, its weakest level in more than two weeks, as investors focused on the upcoming domestic labour market data and the general election. Employment is expected to increase by a modest 0.4% in the third quarter, while the jobless rate is seen edging down to 5.5%. Any upside surprise could strengthen market expectations for a December rate hike, currently priced in at about a 75% probability.
At the same time, New Zealanders will go to the polls on Saturday, with recent surveys failing to identify a clear winner or a likely governing coalition. This political uncertainty is another key factor for investors, given the possible implications of a change in government for fiscal policy and the broader economic outlook. Last week, the Reserve Bank of New Zealand unexpectedly left its official cash rate on hold at 2.75%, after two consecutive increases.
