- NZD/USD licks its wounds during the first daily negative in four.
- China Caixin Services PMI rises to the highest levels since November 2020.
- Risk-off mood previously allowed Kiwi pair to consolidate RBNZ-led gains.
- Downbeat US data, yields keep Kiwi buyers hopeful ahead of US employment numbers.
NZD/USD flirts with the 0.6300 round figure during its first loss-making day in four amid early Thursday. While the broad risk aversion underpins the US Dollar’s corrective bounce and weigh on the Kiwi pair, the hawkish bias surrounding the Reserve Bank of New Zealand (RBNZ) joins strong China activity data to prod the bears.
Recently, China’s Caixin Services PMI rallied to 57.8 versus 54.0 expected 55.0 prior. In doing so, the China data rises to the highest level since November 2020.
It’s worth noting that the NZD/USD price jumped to the seven-week high the previous day as the RBNZ surprised markets with 0.50% rate hike. However, downbeat US data triggered recession woes afterward and weighed on the quote. Also likely to have exerted downside pressure on the NZD/USD are the geopolitical fears surrounding Taiwan and North Korea.
That said, a disappointing 19-month low of the US JOLTS Job Openings for February precedes the ADP Employment Change for March which dropped to 145K from 200K expected and an upwardly revised prior of 261K. On the same line, the final readings of S&P Global Composite and Services PMIs for March also came in downbeat as the former one declined to 52.3 from 53.3 preliminary estimations while the Services PMI dropped to 52.6 from 53.8 anticipated earlier. More importantly, the US ISM Services PMI for the said month amplified pessimism as it dropped to 51.2 versus 54.5 expected and 55.1 prior.
Elsewhere, US House of Representatives Speaker Kevin McCarthy’s talks with Taiwanese President Tsai Ing-Wen renewed the Sino-American tussles. On the other hand, North Korea on Thursday accused the U.S. and South Korea of escalating tensions to the brink of nuclear war through their joint military drills, vowing to respond with "offensive action," state media KCNA reported per Reuters.
Against this backdrop, S&P 500 Futures drop for the third consecutive day even if the benchmark US Treasury bond yields remain sluggish around the multi-day bottom but the US Dollar Index (DXY) grinds higher to 101.98 by the press time.
Looking ahead, the weekly US jobless claims data will be important for fresh impulse before Friday’s all-important Nonfarm Payrolls (NFP).
Technical analysis
NZD/USD remains on the way to testing the one-month-old support line, around 0.6245 by the press time, unless breaking a two-month-old 0.6385-90 resistance area
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