NZD/USD bulls firm their grip into jobs report

• NZD/USD awaits the NZ labour market data for the day. 
• Bird is firmer on the market's interpretation of RBNZ comments and factoring in prospects of an August rate hike. 

At the time of writing, NZD/USD is starting out in early Asia near the highs of the day and 0.72% before the forex close at the top of the hour.

NZD/USD move higher overnight from a low of 0.6962 to a high of 0.7018 having appreciated on the Reserve Bank of New Zealand's comments yesterday.

The central bank's press release was floating the idea of tighter lending standards which the market read to mean an August hike was a done deal.

The write-up, published on the RBNZ site, said, “House prices are above their sustainable level and the Reserve Bank of New Zealand – Te Pūtea Matua – is now considering tighter lending standards to reduce the risks associated with excessive mortgage borrowing.”

''In truth, the RBNZ was just pointing out that August was when they next have the opportunity to hike, but it got a reaction anyway,'' analysts at ANZ Bank argued.

Kiwi house prices were meanwhile up 24.8% YoY which is more than ten times its inflation target.

''Indeed, it underlines the dilemma that central banks can’t hit all the varied, wonderful targets we want them to. In fact, they can’t even hit just one – inflation: or if they do, it is only at the price of just about everything else going wrong in the background,'' analysts at Rabobank said on the matter. 

Meanwhile, employment data for the second quarter is due to be released this morning is expected to show a tighter labour market.

''We expect the unemployment rate declined to 4.4% (from 4.7% in Q1), driven by a 1.0% qQoQ (1.5% YoY) rise in employment. A 2.4% YoY lift in wage inflation is expected due to the tight labour market and a lift in the minimum wage taking effect,'' analysts at ANZ Bank said, adding:

''For our part we were already expecting hikes, and in that regard today’s labour market data will be informative, as they could further shake up expectations, adding urgency to unwind last year’s 75bp of cuts if strong, or unwinding some of yesterday’s optimism if weak. But it does seem like the market thinks strong data is a foregone conclusion.''