NZD/USD is trading at 0.7148

Currently, NZD/USD is trading at 0.7148, up 0.04% on the day, having posted a daily high at 0.7151 and low at 0.7114.

NZD/USD penetrated the 0.7150 resistance with the aforementioned high in a continuation of the 10th May channel’s bull trend from down at 0.6817. While New Zealand’s economy is looking solid, the bird is supported. The main focus remains with the Fed and dollar. 10-years are telling below 2.20% suggesting the markets are not so convinced that the Fed can be so hawkish after all. 

Nonfarm payrolls: should solidify Fed’s minds on June – Nomura

“Friday’s US employment report was more of the same old story. Employment growth has been edging down since peaking above 2% in H1 2015, but at 1.6% it’s close to the average of the last 50 years (1.7%). The problem is that GDP growth has averaged 2.8% over those 50 years, but productivity growth is much, much lower now…Meanwhile, with the labour force growing at about 0.8% per annum, trend growth is around 1 ½%, and the current 2% rate is dependent on eking out a further fall in the unemployment rate,” explained Kit Juckes, an economist at Societe Generale. 

Kit Juckes added, “All of which leaves the Fed observing the decent gains in employment, and the modest wage growth, which supports a June rate hike, but doesn’t point them in the direction of any longer-term sense of urgency. The desire to get inflation back to its 2% target (for the PCE deflator) outweighs any sense that they need to get rates to the FOMC’s projected long-term ‘dot’ at 3%.”

NZD/USD levels

The price has rallied through key resistance levels of late breaking up to the 0.71 handle and highest levels since 1st March business. The pair may well find a base on the 0.71 handle with eyes set on a break of the 0.72 handle and 0.7250 a key target. To the downside, with a break below the 0.71 handle, 0.7050 is pivotal guarding 0.7005.
 

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