NZD/USD sticks to NZ jobs data-led gains to one-month tops, above mid-0.7000s
- NZD/USD gained strong follow-through positive traction for the second successive session.
- Upbeat NZ jobs data raised expectations for the RBNZ rate hike and provided a strong boost.
- A subdued USD demand remained supportive, though COVID-19 jitters might cap gains.
The NZD/USD pair consolidated its strong intraday gains to near one-month tops and was seen oscillating in a range above mid-0.7000s heading into the European session.
A combination of supporting factors assisted the NZD/USD pair to gain strong follow-through traction for the second successive day and surge past a key barrier near the 0.7015-20 horizontal zone. The kiwi got a strong boost after blockbuster domestic jobs data cemented expectations for a rate hike by the Reserve Bank of New Zealand.
According to the official data released earlier this Wednesday, New Zealand’s jobless rate dropped sharply to 4.0% during the second quarter, well under market forecasts of 4.5%. Adding to this, the number of employed people rose 1% QoQ and wage growth also topped market expectations, indicating that the domestic economy is running hot.
On the other hand, the US dollar remained on the defensive amid speculations that the Fed will wait for a longer period before slowing its massive monetary support. However, concerns about the economic fallout from the fast-spreading Delta variant of the coronavirus and a goodish bounce in the US Treasury bond yields helped limit the USD losses.
Apart from this, the strong intraday positive move could further be attributed to some technical buying on a sustained breakthrough the 0.7015-20 supply zone. This might have already set the stage for additional gains. Hence, a subsequent strength towards the very important 200-day SMA, around the 0.7100 mark, now looks like a distinct possibility.
Market participants now look forward to the US economic docket, highlighting the releases of the ADP report on private-sector employment and ISM Services PMI. This, along with the US bond yields and the broader market risk sentiment, might influence the USD price dynamics and produce some short-term trading opportunities around the NZD/USD pair.
Technical levels to watch