NZD/USD takes the bids around 0.7170 after the recent jump of over 20 pips during the initial Asian session on Wednesday. In doing so, the kiwi pair respects the strong employment figures for the first quarter (Q1) following the early-day rejection to the RBNZ FSR.
Not only downbeat Unemployment Rate of 4.7% versus 4.9% prior and expected but strong Employment Change and Participation Rate of 0.6% and 70.4% respectively, compared to 0.2% and 70.3% expected in that order, also back the NZD/USD bulls of late.
Earlier in the day, the Reserve Bank of New Zealand’s (RBNZ) bi-annual Financial Stability Review (FSR) flashed mixed signals while conveying the vulnerability of the system despite recent soundness. The RBNZ press conference is on but the absence of Governor Adrian Orr makes the event a dull affair.
On the data side, New Zealand’s fortnightly GDT Price index dropped below -0.3% forecast and -0.1% prior to -0.7%. Details suggest that butter prices dropped 12.1% even as the prices for whole milk powder remain firm.
The NZD/USD prices dropped to the lowest in three weeks the previous day as the US dollar benefited from the risk-off mood. Behind the moves were mixed signals on the rate hikes by US Treasury Secretary Janet Yellen and the coronavirus (COVID-19) woes, not to forget covid vaccine updates suggesting a further increase in global jabbing. It should, however, be noted that the off in China and Japan keep momentum traders.
Amid these plays, S&P 500 Futures struggle for clear direction after the Wall Street benchmark closed in the red.
Moving on, NZD/USD traders may look towards the risk catalysts, as well as the press conference from the RBNZ, for fresh impetus. Additionally, US data will also be crucial as the market prepares for Friday’s monthly jobs report from America.
A convergence of 21-day and 50-day SMA near 0.7150-45 precedes an upward sloping trend line from April 01, around 0.7115, to test NZD/USD bears. However, the 0.7200 threshold becomes the key upside barrier.