NZD/USD keeps recovery moves around mid-0.6550s

• NZD/USD extends late Friday’s pullback moves to print mild gains.
• New Zealand’s Total Filled Jobs were up 9,147 to 2.2 million in August 2020 compared with July.
• Risk sentiment recovers on stimulus hopes, virus woes tame the bulls.
• China is on holiday and nothing lures the momentum traders.

NZD/USD prints mild intraday gains, of 0.10%, while taking rounds to 0.6550 amid the early Asian session on Monday. The Kiwi pair recently benefited from the upbeat second-tier employment data at home while the risk set-up also favors the quote’s positive performance. Though fears of the coronavirus (COVID-19) wave 2.0 and China’s absence restrict the market moves off-late.

New Zealand’s Total Filled Jobs grew 9,147 to 2.2 million in August. The recovery in numbers from the July month takes clues from the education industry. Statistics New Zealand (Stats NZ) quotes economic statistics manager Sue Chapman while saying, “Filled jobs increased across the education sector as a new term and semester began without COVID-19 restrictions.”

Return of optimists or a consolidation?

During the last week, NZD/USD bounced off a one-month low amid a pullback in the US dollar gains. However, the bulls are yet to justify their dominance as risk dwindles due to the mixed catalysts.

Irrespective of the upbeat second-tier employment data, an update from the Stats NZ said, “Despite the rise in filled job numbers in August, they are still well below March 2020 levels before COVID-19 restrictions began. Filled job numbers are usually lower in August than in March by a few thousand, but this year the difference was over 30,000 jobs.”

It should also be noted that the virus woes are rising strongly in the UK and Europe with the latest headlines from The Times suggesting a return of lockdown conditions. On the other hand, Johnson and Johnson Inc. reported strong results of its virus vaccine during the fourth trial. Elsewhere, expectations that the US stimulus package is on its way, as the policymakers are agreeing to re-start the talks, helped improve the market's mood.

Other than the virus woes and domestic data, the weekend release of China’s upbeat Industrial Profits and lack of clarity over Brexit is additional catalysts that confuse NZD/USD traders amid a light calendar.

Even so, S&P 500 Futures print 0.25% gains to 3,295 whereas the US 10-year Treasury yields remain sluggish near 0.65% by the time of press.

Considering the lack of major data/events, headlines concerning the pandemic and the key risk factors will be on the driver’s seat. However, the US dollar’s strength can keep the bulls chained unless any optimistic news recalls the risk-on momentum.

Technical analysis

Unless closing above the September 09 low of 0.6601, buyers are less likely to be convinced. As a result, sellers may look for entries below an ascending trend line from August 20, currently around 0.6510.