NZD/USD CONQUERS 0.6400 AMIDST A RISK-OFF MOOD, POST US NFP REPORT

NZD/USD ended the week up 2.56%. In November, , US non-farm payrolls indicated a tight labor market, so the Fed needs to keep interest rates rising. NZD/USD Price Analysis: Daily close above 0.6 00 spoils rally to 0.6570s. The New Zealand dollar (NZD) rose against the US dollar (USD) for a fourth straight day, boosted by a weaker US dollar. A positive US jobs report suggested the Federal Reserve (Fed) may need to continue raising interest rates to ease a tight labor market, although it did not support the US dollar. Accordingly, NZD/USD is trading at 0.6 0 , which is 0.5 % higher than its opening price. Wall Street ended the week lower. The US Department of Labor (DoL) revealed that non-farm payrolls rose by 263,000 in November, more than the 200,000 forecast, but rose by 28 ,000 from October, increasing pressure on the Federal Reserve (Fed). Based on the data, average hourly wages rose 5.1% in October from .9% a year earlier, adding to inflationary pressures, while the unemployment rate remained at 3.7%. After November’s jobs report, the Federal Reserve is expected to continue to tighten borrowing costs, albeit by 50 basis points. In the latest monetary policy press conference, Federal Reserve Chairman Jerome Powell said that the pace of this tightening is not as important as how high the federal funds rate (FFR) should be. Some Fed policymakers predicted that the FFR would range from about 5% to 5.25%. The Federal Reserve’s decision to curb growth was based on the Institute for Supply Management’s (ISM) Manufacturing PMI report in November. The index fell into bearish territory to 9.0, but also showed worsening conditions. The data reignited recession fears as the US Federal Reserve continued to tighten policy. In fact, the Fed is trying to slow down the economy, which explains the below-trend growth, as Fed Chairman Powell said. Additionally, New Zealand’s (NZ) lackluster economic book is keeping NZD/USD traders in the mood for the US dollar. It must be said that the kiwi rallied on the back of widespread weakness in the US dollar. In the data, the NZ Business Confidence report fell 1 points to -57.1 in November compared to October’s reading. Respondents expect the economy to weaken over the next year, while some respondents expect their business to decline over the next 12 months. NZD/USD Price Analysis: Technical Perspective From a technical perspective, NZD/USD is still bullish after breaking above the 200-day exponential moving average (EMA) on Wednesday. In particular, NZD/USD made a daily low near the November 30 high of 0.6399 during the Friday session, but returned to 0.6 00. If the major stock’s daily close breaks above 0.6 00, a test of the June 2022 high of 0.6576 is on the cards. The Relative Strength Index (RSI) in overbought territory suggests that NZD/USD may consolidate between 0.6350-0.6 00, while the Rate of Change (RoC) confirms that buyers remain in charge. Therefore, the main resistance levels for NZD/USD are the August 12 high of 0.6 68, followed by 0.6500 and the June 2022 high of 0.6575.

Michael Cooper

Learn More →