- NZD/USD stumbles below 0.6100 on risk aversion after positive US data.
- The odds of the Fed raising by 75 basis points have risen to 91%, STIR money market futures show.
- Trade data from New Zealand and the US Non-Farm Payrolls report is next on the economic calendar.
The NZD/USD falls to multi-week lows around 0.6060 on Thursday as the American session winds down, after US data shows solid factory activity while the labor market remains robust, keeping those responsible Fed policy “hopeful” of soft landing despite tightening conditions.
NZD/USD is trading below its opening price after hitting a daily high of 0.6122. However, it fell below the 0.6100 figure as sentiment soured, spurred on by weaker-than-estimated China’s Caixin Manufacturing PMI, slipping into “recession” territory. At the time of writing, the NZD/USD is trading at 0.6075.
Wall Street ended Thursday’s session paring losses, with a late jump in US stocks. Meanwhile, expectations rose for the US Federal Reserve to tighten monetary policy by 75 basis points at the September meeting, with a 92% chance, following strong US ISM and employment figures. .
The US Department of Labor reported that weekly initial jobless claims for the latest week, ending August 27, decreased. Later, the Institute for Supply Management (ISM) revealed that the August manufacturing PMI was unchanged at 52.3, above forecasts, noting that the price index sub-component slowed from 60 to 52.5, which indicating that high prices are falling.
Elsewhere, the dollar index, a gauge of the dollar’s value, hit a 20-year high at 109,997 on the day, though at press time, it was up 0.91%, at 109,675.
The factors mentioned above were a headwind for NZD/USD, which was supported by greenback dynamics and market sentiment due to lack of economic data from New Zealand. Notably, the major currency tested the 1990s low reached on July 14, but buyers entered the scene and regained some ground.
What must be considered
The New Zealand economic calendar will include terms of trade and export volumes, along with import and export prices. In the United States, non-farm payrolls, the unemployment rate and factory orders will be published.
Technical levels
Source: Fx Street
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