- NZD/USD is looking to stretch its recovery above 0.6250 backed by a rebound in the risk-on mood.
- The US Dollar Index is struggling below 104.80 ahead of the US NFP data release.
- Upbeat US ADP Employment Change data has resulted in more troubles for the Fed policymakers.
The NZD/USD pair is struggling to extend its recovery above the immediate resistance of 0.6250 in the Asian session. The Kiwi asset rebounded firmly to near 0.6220 as investors shrugged off the United States' upbeat employment-inspired volatility. On Thursday risk-sensitive currencies witnessed extreme selling pressure after the US Automatic Data Processing (ADP) Employment Change reported the stronger-than-projected addition of fresh payrolls in December.
The US Dollar Index (DXY) is hovering in an extremely narrow range below the immediate resistance of 104.80 as investors await US Nonfarm Payrolls (NFP) data release for fresh impetus. Meanwhile, the S&P500 futures have rebounded significantly, portraying a recovery in the risk-on impulse. The 10-year US Treasury Yields are displaying a subdued performance and are hovering below 3.72%.
The release of the upbeat US ADP Employment data proved that the tight labor market is going to be the major hurdle for the Federal Reserve (Fed) in its way toward achieving price stability. There is no denying the fact that firms must be offering higher wages to attract talent amid solid labor demand. So, any further rebound in the US Consumer Price Index (CPI) may stem from higher wage inflation.
In the meantime, analysts at TD Securities have come forward with expectations for interest rate hikes for CY2023.
Commenting on the minutes of the Federal Reserve's December policy meeting, TD Securities analysts noted that officials remained in broad agreement about the need to push the policy stance further into restrictive territory in the near term. Therefore it expects another 50 basis points (bps) rate increase in February, and expects 25 bps rate hikes in March and May. It projects that the Fed will therefore settle on a terminal Fed funds target rate range of 5.25%-5.50% by May."
Meanwhile rising cases of Covid-19 in China will continue to impact the New Zealand Dollar. Economic activities in China are continuously scaling down as firms have still not resumed operations on a full-fledged note. It is worth noting that New Zealand is one of the leading trading partner of China and a decline in the volume of economic activities in the Sino region impact the New Zealand Dollar.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD: Euro recovers ground but not re-attracting bulls yet Premium
The EUR/USD rose on Monday toward the 1.0800 area, recovering some of Friday’s slide, supported by an improvement in market sentiment, amid easing concerns on the banking sector.
GBP/USD approaches 1.2300 amid a weaker US Dollar
GBP/USD rose on Monday toward the 1.2300 mark, supported by a weaker US Dollar. The pair gained momentum amid a risk-positive market atmosphere, helped by easing banking concerns. The DXY dropped below 103.00 despite higher US yields.
Gold: XAU/USD finds support above $1,940; drops more than 1% on Monday Premium
Spot gold dropped on Monday, losing more than $20 as US yields rose, with the 10-year surpassing 3.50%. The yellow metal bottomed at $1,940/oz and then trimmed losses, climbing back above $1,950.
MicroStrategy buys $150 million worth of Bitcoin as institutional interest soars to eight-month high
Bitcoin has been noting increasing institutional interest for the last few days as whale movement on the network grew.
US Consumer Confidence Preview: No good news for Americans Premium
The United States will publish the March Conference Board Consumer Confidence index, and market players anticipate it has contracted to 101 from 102.9 in February.