New Zealand Dollar Forecast: NZD/USD Launches Higher on Stellar Q1 Jobs Report

New Zealand Dollar, NZD/USD, Covid, NZ Jobs Report -Talking Points

• NZD/USD launches higher after New Zealand post a stellar first quarter jobs report
• Wall Street ends lower as technology shares drag sentiment lower
• Treasury Secretary Yellen says rates may need to rise, market unclear on meaning

BREAKING NEWS: NZD/USD GAINS ON UPBEAT NEW ZEALAND JOBS REPORT

Sentiment may have a chance to recovery Wednesday following a better-than-expected jobs report out of New Zealand. According to the DailyFX Economic Calendar, New Zealand reported an employment change of 0.6% quarter-over-quarter versus an expected 0.3% for the three months ending March. The unemployment rate fell to 4.7% versus the 4.9% forecast. The better-than-expected print could further reduce the RBNZ’s dovishness on policy moving forward.

New Zealand’s job report was preceded by a financial stability report from the Reserve Bank of New Zealand (RBNZ), which stated the island nation’s economy has fared better than initially forecasted. Although the report did also note that vulnerabilities in the financial system persist. Elsewhere, The Australian Dollar received some positive news through an upgraded final services PMI print for April, rising to 58.8 from 55.5 in the preliminary reading.

Wednesday’s Asia-Pacific Outlook

Asia-Pacific markets may still move lower following a gloomy Tuesday on Wall Street that saw technology stocks lead indexes lower. Asia-Pacific markets may get off to a rough start if the downbeat sentiment on Wall Street cascades into broader sentiment. The Nasdaq 100 index (NDX) sank nearly 2%, and the market’s fear gauge VIX index recorded a gain of about 6.4%. The selloff stemmed from US Treasury Secretary Janet Yellen's commentary, stating rates may have to rise to prevent the economy from overheating.

The comments from the Treasury Chief are in direct conflict with recent Fed talk, but some believe she was referencing market interest rates and not the Federal Reserve’s benchmark rate used to spur or slow economic growth. Nonetheless, the market reaction shows just how sensitive investors are to any proposed rate increases.

The US Dollar also took notice of Ms. Yellen’s comments, pushing the DXY higher. Risk-sensitive currencies were overly impacted, however, with the Australian Dollar and New Zealand Dollar both sinking near a full percentage point versus the Greenback. Treasury markets were not spared from the seemingly hawkish comments from the former Fed Chair, which pushed yields lower on the longer-dated side of the curve.

Chinese stock markets will remain closed on Wednesday for the labor day holiday. While mainland Chinese markets will be closed, Hong Kong’s Hang Seng Index (HSI) will be open for trade and perhaps looking to extend gains from Tuesday when the index recorded a 0.70% move higher. China will see some potentially hard-hitting economic data later this week as investors look toward trade data and PMIs from the world’s second-largest economy.

NZD/USD Technical Analysis

The Kiwi Dollar’s move lower against the US Dollar has put NZD/USD in a defensive stance against its 20-day Simple Moving Average (SMA). The recently supportive 100-day SMA was also breached, but the currency pair recaptured the SMAs following the jobs report.

The 61.8% Fibonacci retracement also appeared to deflect further downside and could step in as support again on the next move lower. That move lower may be on the cards, with MACD turning lower after crossing below its signal line, a bearish sign.

NZD/USD Daily Chart

Chart created with TradingView

NZD/USD TRADING RESOURCES

--- Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwateron Twitter

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May 05, 2021 at 11:00AM
Thomas Westwater
https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2021/05/04/New-Zealand-Dollar-Forecast-NZDUSD-Launches-Higher-on-Stellar-Q1-Jobs-Report-.html