New Zealand Dollar, NZD / USD, Covid, New Zealand Job Report – Talking Points
- NZD / USD Rises After New Zealand Releases Stellar First Quarter Employment Report
- Wall Street Closes Down As Tech Shares Ease Sentiment
- Treasury Secretary Yellen says rates may need to be raised and market significance is unclear
MAIN NEWS: NZD / USD NEW ZEALAND JOB REPORT GROWTH
Sentiment may have a chance of rebounding on Wednesday following the better-than-expected New Zealand employment report. According to DailyFX Economic Calendar, New Zealand reported a change in employment to 0.6% qoq versus 0.3% expected for the three months ended March. The unemployment rate fell to 4.7% against the forecast of 4.9%. A better-than-expected print could further diminish the RBNZ’s peacefulness with regard to future policy.
New Zealand’s employment report was preceded by a financial stability report from the Reserve Bank of New Zealand (RBNZ), which said the island nation’s economy did better than originally forecast. Although the report also noted that vulnerabilities in the financial system persist. In addition, the Australian dollar received some positive news thanks to the updated April Services PMI, which rose to 58.8 from 55.5 in preliminary numbers.
Asia Pacific Forecast on Wednesday
Asia Pacific Markets May still fell after a dismal Wall Street Tuesday when leading tech indexes plunged. Markets in the Asia-Pacific region could get off to a rough start if gloomy sentiment on Wall Street escalates into broader sentiment. The Nasdaq 100 (NDX) Index Sags About 2%, and the VIX market fear index recorded an increase of about 6.4%… The sell-off was prompted by a comment by US Treasury Secretary Janet Yellen that rates may need to be raised to prevent the economy from overheating.
The Treasury chief’s comments are in direct contrast to the Fed’s recent speeches, but some believe she was referring to market interest rates rather than the Federal Reserve’s base rate used to stimulate or slow economic growth. However, the market reaction shows how sensitive investors are to any proposed rate hike.
The US dollar also took into account Ms. Yellen’s comments, pushing the DXY higher. However, risk-sensitive currencies were unduly affected, with the Australian dollar and New Zealand dollar falling nearly a full percentage point against the US dollar. Treasury markets did not escape the seemingly hawkish comments of the former Fed chairman, which led to lower yields on the longer side of the curve.
Chinese stock markets will be closed on Wednesday for Labor Day. While mainland China markets remain closed, the Hong Kong Hang Seng Index (HSI) will be open to trade and may look to continue its gains from Tuesday, when the index recorded a 0.70% gain. China will see potentially strong economic data later this week as investors turn their attention to trade data and PMIs in the world’s second largest economy.
Technical Analysis of NZD / USD
The fall in the kiwi against the US dollar caused the NZD / USD to take a defensive position against its 20-day simple moving average (SMA). The recently supportive 100-day SMA was also broken, but the currency pair pulled back the SMA after the jobs report.
The 61.8% Fibonacci retracement also appears to have reflected further decline and may act as support again on the next downside move. This downward move may be clear as the MACD moves below its signal line, which is a bearish sign.
Daily chart NZD / USD
The chart was created with TradingView
TRADE RESOURCES NZD / USD
— Posted by Thomas Westwater, Analyst at DailyFX.com
To contact Thomas, use the comment section below or @FxWestwateron twitter