- NZD/USD rebounds from 1-week low hit in reaction to mixed New Zealand jobs report.
- A positive tone in the markets offers support for the kiwi.
- Recession fears and comments from Fed officials limit USD decline.
The pair NZD/USD it rises back above 0.6250 during the European session, paring some of its losses on Tuesday, which extended to a one-week low in the Asian session on Wednesday. The recovery attempt, however, lacks continuity. The rallies stopped below 0.6270 and it is trading around 0.6255.
The US dollar was lower during the first half of trading on Wednesday, which helped the NZD/USD pair attract some buying near the 0.6215-0.6210 area. Signs of stability in equity markets are not helping the safe-haven dollar to rebound from a multi-week low and offer some support to the risk-sensitive kiwi. However, a combination of factors is helping to prevent a significant dollar recovery.
The New Zealand dollar came under pressure on Wednesday’s mixed jobs data from New Zealand, which showed that the unemployment rate unexpectedly rose from a record low to 3.3% in the second quarter. This largely overshadowed strong wage growth data, which accelerated to 3.4%, the fastest pace since 2008. The data suggests the Reserve Bank of New Zealand (RBNZ) may have to follow through. raising interest rates, although they did not impress the bulls much.
Investors remain concerned about the growing risk of a global economic downturn. Additionally, diplomatic tensions surrounding US House Speaker Nancy Pelosi’s visit to Taiwan are limiting upbeat market moves. On the other hand, statements by Fed officials hinting at more interest rate hikes in the near future are acting as a tailwind for the dollar.
Market participants now await Wednesday’s release of the US Services PMI, due later in the North American session. Also, US bond yields could influence dollar price dynamics and give some momentum to the NZD/USD pair. On Friday it will be the turn of the US employment report.
Technical levels
Source: Fx Street
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