NZD/USD soars above 0.5800 as DXY turns volatile, RBNZ-Fed policy divergence widens

NZD/USD has jumped above 0.5800 firmly after positive commentary from NZ officials.
Wednesday’s rate hike by the RBNZ has widened policy divergence with the Fed.
The kiwi economy doesn’t see any recession to curtail price pressures.
The DXY has refreshed its day’s low amid a risk-on profile.

Sagar Dua FXStreet

The NZD/USD pair has crossed the day-old hurdle of 0.5805 firmly and is looking to establish above the same. At the time of writing, the kiwi pair is trading around 0.5810, 1.26% above Wednesday’s close, and is aiming to record more upside. Stable risk-on impulse has strengthened the commodity-linked currency while the US dollar index (DXY) is facing the heat.

The DXY has refreshed its day’s low at 110.78 and is expected to display sheer volatility expansion ahead. The current downside momentum has opened doors for testing Wednesday’s low around 110.00 as investors are shifting their focus towards the US Nonfarm Payrolls (NFP) data.

The consensus for the payroll data is indicating a decline to 250k vs. the prior release of 315k. Wednesday’s US Automatic Data Processing (ADP) Employment data shows that the economy has added 208k jobs in September. Therefore, cues are favoring a lower-than-expected release.

On the NZ front, the announcement of the fifth 50 basis points (bps) interest rate hike by the Reserve Bank of New Zealand (RBNZ) has widened the RBNZ-Federal Reserve (Fed) policy divergence. RBNZ’s Official Cash Rate (OCR) has been pushed to 3.5% and more hikes are also expected.

Meanwhile, the commentary from New Zealand (NZ) Deputy Prime Minister and Finance Minister Grant Robertson on monetary policy and exchange value has also strengthened the antipodean. The commentary states that the kiwi economy is not anticipating a recession situation to curtain inflationary pressures. They further added that higher interest rates would restrict demand and the inflation rate. And, the number one issue the businesses face is tight labor supply.

NZD/USD

Overview
Today last price	0.5804
Today Daily Change	0.0065
Today Daily Change %	1.13
Today daily open	0.5739

Trends
Daily SMA20	0.5856
Daily SMA50	0.6082
Daily SMA100	0.6196
Daily SMA200	0.6457

Levels
Previous Daily High	0.5807
Previous Daily Low	0.566
Previous Weekly High	0.5755
Previous Weekly Low	0.5565
Previous Monthly High	0.6162
Previous Monthly Low	0.5565
Daily Fibonacci 38.2%	0.5751
Daily Fibonacci 61.8%	0.5716
Daily Pivot Point S1	0.5663
Daily Pivot Point S2	0.5588
Daily Pivot Point S3	0.5516
Daily Pivot Point R1	0.581
Daily Pivot Point R2	0.5882
Daily Pivot Point R3	0.5957

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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