- NZD/USD bulls catch a breather after flashing the biggest gains in two weeks.
- New Zealand’s Q3 Employment Change matched downbeat forecasts, Unemployment Rate recovered from 5.3% expected to 5.4%.
- Fears that RBNZ will follow RBA’s dovish path test the bulls cheering stimulus hopes on US election polls.
- Services PMIs from China and the US will decorate the calendar but the US election updates will keep the driver’s seat.
NZD/USD recovers the 25-pip drop on New Zealand’s third quarter (Q3) employment data, published recently, the early Wednesday morning in Asia. In doing so, the pair battles the 0.6700 round-figure after rising to the highest in one week during the previous day. The reason could be in the upbeat risk sentiment, mainly backed by hopes of further stimulus from the US due to increasing calls of a Democratic Party’ victory in the American presidential election.
Nothing matters more than the US elections…
While New Zealand’s Q3 Employment Change matched -0.8% expected versus -0.4% prior, the Unemployment Rate eased from -5.4% forecasts to -5.3%. Further details suggest that the Participate Rate and the Labor Cost Index flashed better readings than expected during the stated period.
Read: New Zealand Unemployment Rate in line with expecations Q3, 5.3% vs prev 4.0%
Talking about certain other economics published Tuesday, New Zealand’s GDT Price Index dropped below 0.4% expected to -2.0% with the details suggesting -2.0% figures for the price growth of the Whole Milk Powder (WMP). On the other hand, the US Factory Orders rose past-1.0% forecasts to 1.1%, MoM, in September.
More important for the NZD/USD traders were the updates/polls suggesting the clear victory of the Democratic Party in the US elections. Although some media report signaling the fear of a surprise, most expectations favor the blue wave, a condition where Democrats have the power in both the houses. Traders anticipate heavy government spending from the Democratic Party, which could help the optimists and Antipodeans like the New Zealand dollar.
Read: 2020 Elections: The case for a historic Trump defeat, in five quick charts
Against this backdrop, Wall Street and the US 10-year Treasury yields both pleased the optimists. In doing so, traders ignored fears that the RBA’s rate cut and the quantitative easing (QE) paves the way for the next week’s dovish announcement from the RBNZ.
Moving on, global markets will be closely watching US presidential election polls as the voting will start rolling down from 00:30 GMT. A clear signal of a blue wave is considered positive for the commodity-linked currencies. However, a surprise can’t be ruled out and hence warrant market players to remain cautious while trading.
Technical analysis
A clear break of the October 27 top surrounding 0.6730 becomes necessary for the NZD/USD bulls to aim for the September month’s peak near the 0.6800 threshold.
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