- The NZD/USD currency pair experienced a significant increase, surpassing the 0.6100 level. However, it is currently on track to conclude a third consecutive week with a decline.
- The nonfarm payrolls (NFPs) for July were reported to be lower than the anticipated levels, while there was an observed increase in wages during the same period.
- The upcoming week will significantly emphasize the Consumer Price Index (CPI) data for July.
The New Zealand dollar appreciated against the United States dollar late in the week. But it’s worth noting that this specific currency pair is on track for its third straight weekly loss at the end of the week. Recent reports on the state of the American labor market have shown both encouraging and disheartening trends. The US dollar fell below the 102.00 mark on the USD DXY index, which gauges the Greenback’s value relative to other major currencies.
The sector still indicates an ongoing imbalance, which could restrict any potential losses for the Greenback. This is due to the consistent and confident bets on the Federal Reserve (Fed) maintaining a hawkish stance. However, the New Zealand calendar does not appear to have any significant events or offerings of relevance.
The Nonfarm Payrolls report from the United States revealed positive and negative data. The headline states that in July, 187,000 new jobs were generated. This figure fell short of the anticipated 200,000 jobs, although it did surpass the revised number of 185,000. Furthermore, it is worth noting that there was a notable increase of 0.4% in Average Hourly Earnings during the corresponding month, surpassing initial projections. Additionally, the annual figure experienced a rise, reaching a level of 4.4%. In addition, it is worth noting that the Unemployment rate for the given period was marginally below the anticipated level, with a recorded rate of 3.5% compared to the projected rate of 3.6%.
CME FedWatch data shows that the probability of a September rate hike of 25 basis points (bps) has not changed. However, the chances of an increase in November are getting close to 30% thanks to a recent uptick. Inflation statistics due out next week will play a significant part in setting investor expectations, which will, in turn, affect the dynamics of the USD price, given the Federal Reserve’s reliance on data.
NZD/USD Levels to Keep an Eye On
Technically speaking, the short-term outlook for NZD/USD is neutral to bullish based on a study of the daily chart. The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) show signs of weakness, but there is also evidence of possible strength. It’s also important to note that the pair trades under all three major moving averages (20, 100, and 200 days). This suggests a prevailing presence of sellers in the market, which holds significance for the overall outlook. Consequently, it becomes imperative for buyers to step up their efforts to reverse this trend. According to the current analysis, the bearish sentiment on the weekly chart is becoming increasingly prominent. This is primarily because the currency pair is on track to register a third consecutive weekly decline, amounting to a decrease of approximately 4% since the middle of July.
The support levels for the currency pair are observed at 0.6100, 0.6060, and 0.6050.
Some potential resistance levels to consider are 0.6130, 0.6150, and 0.6200.