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  • NZD/USD stays in a consolidation phase around 0.7250.
  • US Dollar Index clings to modest gains on Friday.
  • Focus shifts to Nonfarm payrolls data from US.

The NZD/USD pair closed in the negative territory on Thursday and seems to have gone into a consolidation phase on Friday. As of writing, the pair was virtually unchanged on a daily basis at 0.7255.

USD rally pauses ahead of NFP

The broad-based USD strength on the back of soaring US Treasury bond yields caused NZD/USD to turn south in the second half of the week.

The 10-year US T-bond yield rose more than 10% since Wednesday as investors cheered ramped-up US government spending with Democrats retaining the majority in the US senate. The US Dollar Index rose above 90.00 for the first time in a week on Friday and was last seen gaining 0.15% at 89.85.

Meanwhile, the upbeat market mood, as reflected by rising global equity indexes, is helping the risk-sensitive kiwi find demand on Friday and limits NZD/USD’s downside.

Later in the session, the Nonfarm Payrolls (NFP) report from the US will be looked upon for fresh catalysts. Previewing the NFP data, “for the moment, the dollar is insuperable from the US labor market,” said FXStreet Senior Analyst Joseph Trevisani. “December’s greenback decline was largely due to the worsening claims and payroll numbers. There is unlikely to be any good news for the US currency in Friday’s payroll release.”

US Nonfarm Payrolls December Preview: Labor economy woes escalate.

Technical levels to watch for