NZD/USD drops to 0.6830 on USD strength, eyes on New Zealand employment data
|- US Dollar Index advances toward mid-96s in the NA session.
- A sharp rebound in 10-year T-bond yields help greenback gather strength.
- The unemployment rate in New Zealand in Q4 is expected to rise to 4.1%.
With the greenback preserving its broad-based strength in the NA session, the NZD/USD pair continued to edge lower and touched a fresh weekly low of 0.6829. As of writing, the pair was down 0.9% on the day at 0.6831.
The initial bearish pressure the pair encountered earlier in the day was triggered by a sharp fall seen in the positively-correlated AUD/USD pair, which lost more than 100 pips today amid the RBA Governor Lowe's dovish/neutral remarks about the monetary policy outlook.
Later in the day, the kiwi recovered a small portion of its daily losses after New Zealand's bi-weekly GDT auction yielded a 6.7% increase in the GDT Price Index. However, the fact that the US Dollar Index extended its daily rally in the second half of the day didn't allow the pair to cling to its recovery gains and dragged the pair further lower. Boosted by a decisive rebound in the 10-year T-bond yield in the last couple of hours, the DXY rose to a 12-day high of 96.40, where it was adding 0.35% on a daily basis.
In the early trading hours of the Asian session, the Statistics New Zealand will be publishing the labour market data for the fourth quarter of 2018. Analysts expect the unemployment rate to increase to 4.1% from 3.9% in the third quarter and see the labour cost index ticking up to 2% in the same period. A positive reading could help the NZD start retracing today's fall, and vice versa.
Technical levels to consider
The initial support for the pair aligns at 0.6820 (Jan. 30 low) ahead of 0.6785 (50-DMA) and 0.6745 (Jan. 25 low). On the upside, resistances could be seen at 0.6905 (daily high), 0.6940 (Feb. 2 high) and 0.7000 (psychological level).
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