NZD/USD: Bulls battle 0.6650 on upbeat New Zealand employment data

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  • NZD/USD ticks up to 0.6644 after New Zealand’s Unemployment Rate dropped below market consensus and prior.
  • Market’s risk sentiment sours as a deadlock over the US stimulus plan join fresh Sino-American tension, virus woes.
  • Next week’s RBNZ will be the key for the pair, US employment data, ISM Non-Manufacturing PMI decorate this week’s calendar.

NZD/USD takes the bids near 0.6640, following its run-up to intraday high of 0.6644, after Statistics New Zealand defied downbeat forecasts during the early Wednesday’s Asian session. The key data helps the pair to extend Tuesday’s recovery moves while flashing the second positive day in the last two.

Fewer hardships for RBNZ…

Not only lesser than expected and previous reading of Unemployment Rate to 4.0% but a softer than forecast decline in Employment Change, to -0.4% versus -2.0% expected, also portrayed a rosy picture of New Zealand’s job market for the second quarter (Q2).

Read: New Zealand Q2 s/adj jobs growth -0.4 pct QoQ (Reuters poll -2.0 pct)

With the data breaking all odds favor the Reserve Bank of New Zealand (RBNZ) keep its refrain from the further rate cuts, NZD/USD surged after the release.  Even so, risk catalysts keep the bulls chained.

Among the key challenges to the pair the American Congress’ failure to deliver the much-awaited stimulus plan become the major one off-late. The issue becomes critical after Friday’s expiry of unemployment claims benefits. Recent updates suggest Republicans don’t want to respect Democratic Party’s push for over $3.0 trillion plan but may compromise on jobless benefits push. It should be noted that the US decision-makers will go on a vacation after this week and hence a decision over the plan becomes much more crucial to the markets.

On the other hand, US-China tensions flare-up after America pushes TikTok to accept some US company as their owner to continue doing business. Even so, the Chinese Ambassador to the US Cui Tiankai tried to placate the tussle off-late. Furthermore, a devastating blast in Lebanon offers a distant push to the gold buying.

While portraying these risk-catalysts, S&P 500 Futures refrains to respect Wall Street’s upbeat closing.

Looking forward, traders will gather more clues to anticipate a hawkish statement from the RBNZ. In doing so, US employment data and today’s ISM Non-Manufacturing PMI could be the key. However, virus woes in Australia and aid package uncertainty won’t lose their importance in the meantime.

Technical analysis

While 21-day SMA near 0.6610 offers immediate support to the pair, an ascending trend line from March 19, at 0.6545 now, favors the bulls targeting fresh run-up beyond 0.6700.

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