NZD/USD bulls move aside ahead of another busy US schedule

NZD/USD is slightly down on the day losing 0.1% in early Asia dropping from a high of 0.6289 to a low of 0.6275 despite the risk-on mood that ended the month of July, putting the greenback on the back foot. However, corrections are taking place across the board at the start of what could be another eventful week as per the US calendar. 

Meanwhile, the US dollar was sliding at the end of last week following a dovish outcome at the Federal Reserve and perceived softening in sentiment on the part of policymakers. US growth data disappointed, with Gross Domestic Product had fallen 0.9% last quarter, which also weighed on both US yields and the greenback as this data added to a 1.6% contraction in the quarter before that. Last week the US Federal Reserve raised its policy rate by 75bp for the second consecutive meeting and Chair Powell was noting the Fed could slow the pace of its hike at future meetings.

As inflation surges across major markets and central bankers fight to raise rates without killing off growth, riskier markets like stocks have tended to react positively to any perceived softening in sentiment on the part of policymakers. ''Powell’s recent comments around data dependence will keep the upcoming US labour market statistics front of mind this week, but that data isn’t released until 12:30am (NZT) Saturday'' analysts at ANZ Bank said

''Before that, it’s going to be all eyes on the NZ Q2 labour market release (Wed) and the RBNZ implications. We’ve pencilled in a 2.8% unemployment rate vs the Reserve Bank of New Zealand May MPS forecast of 3.1%. Wage growth will also be key, but the bar to surprise the RBNZ to the upside on that front is higher.''

NFP in focus

Meanwhile, markets shrugged off data suggesting slightly stronger-than-expected inflationary pressures in the US and perhaps the main focus now will be this week's critical Nonfarm Payrolls jobs data. US employment likely continued to advance firmly in July, analysts at TD Securities said, but at a more moderate pace after four consecutive job gains at just below 400k in March-June. ''High-frequency data, including Homebase, still point to above-trend job creation. We also look for the UE rate to stay at 3.6% for a fifth straight month, and for wage growth to remain steady at 0.3% MoM (4.9% YoY).''