Article by ForexTime

Last week represented a very quiet week for the pair. The only economic release that encouraged any market reaction was Wednesday’s employment report, where the response was mixed.

On one hand, the New Zealand unemployment rate fell to its lowest level in over five years (5.6%) which should of course be viewed positively. However, seasonally adjusted employment failed to meet expectations. During Q2, seasonally adjusted employment rose by 0.4%, below the 0.7% economists hoped for. This resulted in downside pressure and at one stage, the NZDUSD fell to a two-month low (0.8421).

If wondering why the NZDUSD declined, seasonally adjusted employment failing to meet expectations is an indication that New Zealand corporations are feeling the effect of higher borrowing rates. The employment report could be used as a reason for the Reserve Bank of New Zealand (RBNZ) to pause monetary tightening.

Next week is low in New Zealand economic data. The only noticeable releases are Business NZ Performance of Manufacturing Index and Retail Sales excluding inflation, both on Wednesday morning. Unless a RBNZ statement emerges confirming that the Central Bank will pause monetary tightening (raising rates), not much movement in this pair is expected. To be honest, the Kiwi currently appears to be in a consolidation stage.

No clear technical patterns on the Daily timeframe are apparent right now. The Stochastic Oscillator is also currently ranging, further suggesting that the NZDUSD is consolidating. Support can be found at 0.8451 and the two-month low, 0.8425. A potential future low (4^th June) is located at 0.8401.

If this pair moves to the upside, resistance is located at 0.8523 and 0.8564.

Written by Jameel Ahmad, Chief Market Analyst at FXTM.

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Article by ForexTime

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