- NZD/USD slides to a multi-day low amid modest NFP-inspired USD strength.
- The US economy added 263,000 jobs in September and the unemployment rate falls to 3.5%.
- The data reaffirms the Fed’s interest rate hike bets and favors dollar bulls amid risk aversion.
The pair NZD/USD is under some selling pressure during the early American session and falls to a four-day low after the release of US labor market data. The pair, however, recovers a few points and is currently trading with modest intraday losses, just below 0.5650.
The US dollar hit a new weekly high in reaction to the upbeat US NFP report, which in turn puts some downward pressure on the NZD/USD pair. The closely watched jobs data showed the jobless rate unexpectedly fell to 3.5% in September from 3.7%. In addition, the US economy added more than expected, 263,000 new jobs during the reported month.
The data raised bets for a further 75 basis point Fed interest rate hike in November, evident by the further rise in US Treasury yields. This, coupled with the prevailing risk-aversion mood, is seen as underpinning the safe-haven dollar and driving away flows from the risk-sensitive kiwi. However, the NZD/USD pair finds some support near 0.5600.
The lack of follow through on the selling warrants some caution on the part of bearish traders and before positioning themselves for any further decline. That said, a meaningful recovery still looks elusive amid prospects for more aggressive policy tightening by the Fed. This, coupled with recessionary fears, suggests the path of least resistance for NZD/USD is it is downward.
Technical levels to watch
Source: Fx Street
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