NZD/USD struggles above 0.5800 on mixed New Zealand Q3 employment statistics, Fed eyed

• NZD/USD fails to reverse pullback from six-week high, mildly offered of late.
• New Zealand’s Employment Change increased, Unemployment Rate stayed static in Q3.
• Market sentiment sours ahead of Fed, firmer US data recall DXY buyers.
• DXY bulls need more than Fed’s 75 bps rate hike to keep the reins.

NZD/USD prints mild losses around 0.5830, failing to reverse the late Tuesday’s pullback from a six-week high after an initial uptick post-New Zealand’s (NZ) third quarter (Q3) employment data released on early Wednesday. In addition to the mixed job numbers, the market’s anxiety ahead of the all-important Federal Open Market Committee (FOMC) meeting also challenges the Kiwi pair.

New Zealand's Q3 Unemployment Rate remained unchanged at 3.3%, and the Employment Change rose to 1.3% versus 3.2% and 0.5% respective market forecasts. Following the data, Reserve Bank of New Zealand Deputy Governor Christian Hawkesby said, “We have a very hot labor market, need to ensure that demand cools.” While speaking at the RBNZ's Financial Stability Report (FSR), the policymaker also stated that (RBNZ) will consider tightening policy faster or slower at MPS while seeing the balance of risks on the global economy to the downside.

Also read: New Zealand jobs data puts a marginal bid into NZD

Earlier in the day, GDT Price Index slumped to -3.9% versus 0.6% expected and -4.6% prior.

On the other hand, the US data relating to the October month activities and job openings came in firmer. That said, the US JOLTS Job Openings increased to 10.717M in September versus the 10.0M forecast and upwardly revised 10.28M previous readings. Further, US ISM Manufacturing PMI increased to 50.2 in October versus 50.0 market forecasts and 50.9 prior. On the same line, final readings of the US S&P Global Manufacturing PMI for October rose past 49.9 initial forecasts to 50.4 but stayed below 52.0 readings for the previous month.

It should be noted, however, that hopes of easing covid restrictions in China and recently firmer China Caixin Manufacturing PMI for October, despite posting the third print below 50.00, might have previously helped the NZD/USD buyers.

Amid these plays, Wall Street closed in the red despite a firmer opening while the US Treasury yields are tighter around 4.05%, suggesting the risk-off mood, probing the NZD/USD bulls near the multi-day high.

Looking forward, comments from RBNZ Governor Adrian Orr could entertain NZD/USD traders ahead of the critical Fed verdict. The US central bank’s readiness for a 0.75% rate hike is already priced in and hence won’t please the US dollar much. However, the critical part will be how well the Fed policymakers could convey a brake to the aggressive rate hikes.

Technical analysis

A daily closing beyond the 50-DMA hurdle surrounding 0.5845 appears necessary for the NZD/USD buyers to keep the reins.