- NZD/USD struggles to extend the strongest daily gains in eight weeks.
- Market sentiment improved post-NFP but bulls stay skeptical.
- Virus concerns in Australia, Sino-US tussles also exert downside pressure.
- New Zealand ANZ Commodity Price Index, China Caixin Services PMI can direct nearby moves, US holidays may reduce market liquidity.
NZD/USD edges higher, after bouncing off a two-week low, around 0.7030 as Asian traders brace for Monday’s work. The kiwi pair cheered risk-on mood the previous day to register the heaviest daily rise since early May. The sentiment seemed to have taken clues from the US employment report. However, macro challenges jump back to the table to test the recovery moves of late.
US jobs report trimmed weekly losses…
US employment data for June came in mixed and favored NZD/USD to pare the weekly losses, despite initially fueling the US dollar. The headline Nonfarm Payrolls (NFP) jumped past the 700K forecast and upwardly revised 583K prior. Though, an uptick in the Unemployment Rate to 5.9% from 5.8%, versus 5.7% market consensus, coupled with no change in Participation Rate of 61.6%, troubled the analysts in predicting the Fed’s next moves.
Although strong NFP initially pushed the US dollar, the equities gained afterward on reading the details. The same joined the profit-booking moves of the greenback to favor the NZD/USD consolidation.
It should, however, be noted that the odds of the Fed’s next moves remain divided and exert downside pressure on the Antipodeans. Also weighing the quote could be the coronavirus (COVID-19) concerns at the largest customer Australia and the Sino-American tussles.
Amid these plays, US Treasury yields dropped 4.9 basis points (bps) to 1.43% whereas the Wall Street benchmarks closed positive, with S&P 500 Futures marking the seven-day uptrend to refresh the record top.
As NZD/USD buyers seek fresh clues around the key upside hurdle, New Zealand ANZ Commodity Price Index for June, expected 1.2% versus 1.3%, may offer immediate direction. Also in the pipeline for publishing in Asia is China’s Caixin Services PMI for June, market consensus 55.7 versus 55.1 previous readouts. It should, however, be noted that an off in the US may keep the pair moves restricted during the late hours but the risk catalysts may try to entertain intraday traders.
Technical analysis
The receding difference between MACD and signal line, coupled with the recently recovering RSI conditions, back the NZD/USD pair’s latest bounce. Even so, a downward sloping trend line from early June, surrounding 0.7045, becomes the nearby key hurdle for the bulls to tackle ahead of the 200-DMA level of 0.7060.
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