NZD/USD bears moving in as Wall Street slides into the afternoon trade

NZD/USD is melting in the latter part of the US session as US stocks slide ahead of the close in a choppy start to the week ahead of critical events. At the time of writing, NZD/USD is losing  0.13% and has fallen from a high of 0.6508 to a low of 0.6472 having just printed a fresh low for the New York day. 

The moves on Wall Street have been led by the tech-focused Nasdaq which is down by more than 1% on Monday as mega-cap growth stocks including Apple, Amazon and Alphabet dropped before earnings reports this week. The antipodeans are high beta currencies that tend to track the performance of global equities, hence the slide in the bird. 

Key events ahead

The main focus in markets will be the Federal Reserve and US Nonfarm Payrolls, both of which could be pivotal for the forex space. Equally, there is domestic labour market data on the calendar for the Kiwi. ''We expect another firm labour market print in Q4 though we don't think it is a game-changer to nudge the Reserve Bank of New Zealand towards a 75bps point hike after the Q4 CPI print last week squarely missed the RBNZ's forecast,'' analysts at TD Securities argued. ''However, we see a terminal rate of 5% as necessary to quell the risk of a wage-price spiral as quarterly wages growth rise and set a new record for annual wage growth.''

As for the Fed, the markets are pricing for the Fed's benchmark rate to peak at 4.93% in June, up from 4.33% now, and then for the central bank to cut it to 4.52% by December. However, Fed officials have been pushing back against market calls for a pivot and said that they will need to keep rates in restrictive territory for a period of time in order to bring down inflation. 

Meanwhile, analysts at ANZ Bank said in a note today that ''the Kiwi has been doing well but the economic cycle broadly is turning, and US markets have scope to “price out” a lot of cuts, which should help the USD. But let’s get through tomorrow’s NZ labour data.''