- NZD/USD is showing signs of exhaustion in the upside momentum, however, the upside bias is intact.
- The USD Index has refreshed its nine-month low at 100.51 amid a cheerful market mood.
- Higher job openings and lower employment numbers (Jan) in the US economy indicate that labor demand is exceeding supply.
The NZD/USD pair is facing fragile hurdles in overstepping the seven-month high at 0.6529 in the Tokyo session. The upside bias in the Kiwi asset is intact as the Federal Reserve (Fed) has slowed down the pace of policy tightening further after sensing the fact that the disinflationary process has started in the United States.
S&500 futures have added more gains after an upbeat Wednesday session, portraying a cheerful market mood. Meanwhile, the improved risk appetite of the market participants has triggered volatility for the US Dollar Index (DXY). The USD Index has refreshed its nine-month low at 100.51, at the time of writing, and is expected to remain on tenterhooks.
Although Fed chair Jerome Powell in his commentary has confirmed that more rate hikes are in place till the monetary policy gets sufficiently restrictive, the room for more policy tightening is extremely low. Consumer spending has slowed down and manufacturing activities have contracted for three consecutive months, which indicates that further interest rate hiking could spoil firms’ morale and push the economy into recession.
On the US labor market front, Job openings accelerated to 11.012M vs. the consensus of 10.25M and the former release of 10.44M. While US Automatic Data Processing (ADP) Employment data landed at 106K significantly lower than the estimates of 178K and the former release of 253K. The combination of higher job openings and lower employment numbers indicates that labor demand is exceeding supply, in times of higher inflation, which seems a good thing for the United States economy.
For further guidance on US employment, the release of the US Nonfarm Payrolls (NFP) data will be of utmost importance.
On the New Zealand front, unimpressive Employment data released on Wednesday might delight the Reserve Bank of New Zealand (RBNZ). Analysts at Westpac believe “While the jobs market is coming from a very strong starting point, there is good reason to expect deterioration in the years ahead. In contrast, wage inflation remains on the rise, and the turning point is likely to come later.”
For interest-rate guidance, Westpac sees a further hike in the Official Cash Rate (OCR) by 50 basis points (bps) in its February meeting.
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 finds support above 1.0450, holds at 10-month lows
EUR/USD dropped to a fresh low for the year, reaching a level close to 1.0450 on Tuesday. It then experienced a slight rebound, but recovery momentum faded around 1.0480. The US Dollar continues to be supported by positive US economic data, higher yields, and a risk-averse market sentiment.
GBP/USD moving sideways around 1.2070
GBP/USD reached a bottom at 1.2053 on Tuesday, marking the lowest level since March. However, it later trimmed its losses and rebounded to 1.2100. Nevertheless, the pair pulled back once again following positive US data. It is stabilizing around 1.2070.
Gold moves closer to $1,800 amid risk-off flows Premium
Gold price stays under modest bearish pressure and trades below $1,830 in the second half of the day on Tuesday. The benchmark 10-year US Treasury bond yield holds at fresh multi-year highs above 4.7% after upbeat US data, not allowing XAU/USD to gain traction.
Bitcoin Lightning Network capacity falling to a 14-month low should not worry BTC investors
Before Bitcoin Ordinals and BRC-20, the world’s first cryptocurrency network ran the most prominent Layer-2 solution – Lightning Network (LN). Over the past, the network was widely utilized for conducting faster transactions, but LN seems to be losing the amount of BTC on it at the moment.
S&P 500 Forecast: Index slides over 1% as risk-off mood persists
The S&P 500 index lost 0.74% last week, which was the fourth week in a row where the index declined. That performance came despite Personal Consumption Expenditures (PCE) data showing that Core inflation was growing at its slowest pace in two years.