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  • NZD/USD taking the brunt of risk-off flows, coronavirus remains a threat.
  • US data forcing an upside extension in the US dollar, hurting the antipodeans. 
  • RBA/RBNZ play-off could move back in favour of AUD/NZD bears, depending on today’s Aussie unemployment rate. 

NZD/USD is trading in early Asia on the backfoot, disembowelled by strength in the US dollar and has even been surpassed by its sister currency, the Aussie which has been making tracks regardless of the slight divergence between the Reserve Bank of New Zealand and that of Australia’s. However, today’s jobs data could be a game-changer for AUD/NZD. 

At the time of writing, NZD/USD is trading at 0.6382, having travelled between a range of 0.6370 and a high of 0.6410. The Kiwi was pressured with the USD on the offence again, helped along by better US PPI data and firming equities. The DXY made further advanced on the 99 handle and reached towards a 45-moth high. More on that here: US Dollar Index Price Analysis: DXY unstoppable ahead of FOMC, trading near 45-month highs

US events

Meanwhile, we quickly moved over the Federal Open Market Committee minutes which caused no great shakes in the FX space, arriving inline with expectations. More on that here: FOMC minutes: Policymakers expect economic growth to continue at a moderate pace

As for US data which did inspire some action on the FX board, the US Jan PPI came in much stronger than expected. “The headline rate rose to 2.1% y/y vs 1.3% in Dec with the core rate rising to 1.7% y/y (prev 1.1%). The rise was largely due to a 0.7% rise in services costs as strong rises in retailer margins offset weakness in freight and cargo. Nonetheless, the picture remains one of subdued pipeline inflation pressures,” analysts at ANZ Bank explained. 

AUD/NZD in focus

Looking ahead for the day, the key event in Oceana will come with the Aussie jobs report. The market is looking for a +10k rise in AU jobs in January with the unemployment rate ticking up to 5.2% vs 5.1%. If we see a contraction in that unemployment rate, we will likely see a drop in the Aussie which could draw attention back to the 1.0390 support structure on higher prospects of an RBA rate cut, (this is also taking into consideration that the 17th Feb highs have not held as a support structure in AUD/NZD. 1.0450 will be the first sign of weakness followed by 1.0420). 

NZD/USD levels