NZD/USD drops from weekly highs post-dismal ADP report, meanders around 0.6630s

The New Zealand dollar climbs but retreats from weekly highs around 0.6662 after mixed than foreseen NZ jobs report released in the Asian session. At the time of writing, the NZD/USD is trading at 0.6637.

The US ADP Employment report was ignored by investors as they prepare for Friday's NFP

An hour and a half before Wall Street’s opened, the ADP Jobs report was released. The figures were dismal, showing the losses of more than 301K employments when polled economists expected at least 207K private jobs added to the economy. 

The ADP Chief Economist said that “The labor market recovery took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth.” Nevertheless, officials in the White House and Fed members warned that the January employment report would be disappointing, subject to the impact of the Omicron variant.

Meanwhile, in the Asian session, New Zealand’s employment report showed that the unemployment rate fell from 3.3% to 3.2%, while the Labor Cost Index jumped two tenths from the previous month to 2.6%., but short of the 2.9% foreseen.

The RBNZ is expected to hike rates 25 basis points to the Overnight Cash Rate (OCR) at the February meeting. Nevertheless, wage growth is lagging widely, so the NZ central bank could decide to slow rate hike increases in 2022, allowing inflation to shoot up.

NZD/USD Price Forecast: Technical outlook

The NZD/USD is downward biased, as shown by the daily moving averages (DMAs) residing above the spot price, despite the recent jump from YTD lows, at 0.6529. All the DMAs have a downward slope, suggesting the downtrend could be accelerating. Furthermore, a bottom downslope trendline of a descending channel, broken to the downside on January 26, located around the 0.6650-60 range, was challenged through the day.

Failure to break the abovementioned opened the door for further losses. The NZD/USD first support would be the figure at 0.6600. A breach of it, then the NZD/USD would face January 28 high, previous resistance-turned-support at 0.6588, followed by the YTD low at 0.6529.