NZD/USD attempts a rebound above 0.6150, risk-off impulse is still active

The NZD/USD pair has sensed some bids after a vertical drop to near 0.6160 in the late New York session. The kiwi asset witnessed intense selling pressure on Monday after surrendering the round-level support of 0.6200. An attempt at a recovery near 0.6160 should not be considered a reversal, as the market mood is still cautious, and a cushion is yet to be finalized.

The US Dollar Index (DXY) has extended its gains to near 106.67 after a V-shape recovery from a low of 105.40. Rising protests against the Covid-19 lockdown in China have significantly impacted commodity-linked currencies, being their major trading partners. Therefore, the decline in antipodeans is higher than the gains recorded in the USD Index.

S&P500 has experienced significant losses, portraying a sour market mood. Meanwhile, the returns on US Treasury bonds are still subdued ahead of a speech from Federal Reserve (Fed) chair Jerome Powell. After a mild recovery, the 10-year US Treasury yields are still below 3.70%. It seems that anxiety ahead of Fed Powell’s speech has sidelined them.

Apart from Fed Powell’s speech, investors keep an eye on the United States Automatic Data Processing (ADP) Employment data. As per the estimates, the US economy has created additional 200k jobs in November vs. the prior release of 239k. The job creation numbers have been declining in the past few months as higher interest rates and weaker economic projections have forced firms to use their current manpower in the best manner and postpone the recruitment process.