- NZD/USD bounces from a one-week low touched in reaction to the mixed domestic jobs report.
- A positive risk tone underpins the safe-haven USD and offers support to the risk-sensitive kiwi.
- Recession fears, hawkish remarks by Fed officials limit the USD downside and cap the major.
The NZD/USD pair climbs back above mid-0.6200s during the early European session, triming a part of its heavy intraday losses to a one-week low. The attempted recovery, however, lacks follow-through and spot prices remain in the red, down around 0.20% for the day.
The US dollar edges lower during the first half of trading action on Wednesday, which, in turn, helps the NZD/USD pair to attract some buying near the 0.6215-0.6210 area. Signs of stability in the equity markets fail to assist the safe-haven buck to capitalize on the overnight bounce from a multi-week low and offer some support to the risk-sensitive kiwi. That said, a combination of factors contributes to keeping a lid on any meaningful recovery for the major.
The New Zealand dollar continues to be weighed down by Wednesday's mixed employment details, showing that the jobless rate unexpectedly rose from a record low to 3.3% in the second quarter. This, to a larger extent, overshadowed strong wage growth data, which accelerated to 3.4%, or the fastest pace since 2008. The data suggests that the Reserve Bank of New Zealand (RBNZ) may need to keep raising interest rates, though did little to impress bulls.
Investors remain concerned about the growing risk of a global economic downturn. Apart from this, diplomatic tensions over US House Speaker Nancy Pelosi's Taiwan visit are capping optimistic moves in the markets. Furthermore, the overnight hawkish remarks by Fed officials, hinting that more interest rates are coming in the near term, act as a tailwind for the buck. This, in turn, is holding back bulls from placing fresh bets around the NZD/USD pair.
Market participants now look forward to Wednesday's release of the US ISM Services PMI, due later during the early North American session. Apart from this, the US bond yields could influence the USD price dynamics and provide some impetus to the NZD/USD pair. Traders might further take cues from the broader market risk sentiment, though the focus would remain glued to the closely-watched US monthly jobs report - popularly known as NFP on Friday.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.