New Zealand Dollar, Wall Street, NZ Jobs Report, China – Talking Points
- Asia-Pacific markets set to move cautiously higher ahead of the Fed
- New Zealand Dollar trimmed losses after strong Q3 jobs data
- NZD/USD rebounds softly after intraday test of psychological level, EMA
Wednesday’s Asia-Pacific Forecast
Asia-Pacific markets may follow in step after Tuesday’s upbeat performance seen on Wall Street, but traders will likely remain cautious ahead of the Federal Reserve’s interest rate decision tomorrow. The Dow Jones Industrial Average (DJIA) gained 0.39% on New York’s closing bell. Rosy US corporate earnings continue to underpin equity market valuations.
The New Zealand Dollar dropped -- along with its regional peer, the Australian Dollar -- against the Greenback. Traders appear to be pricing in a hawkish move for tomorrow’s Federal Reserve policy meeting when balance sheet tapering is expected. However, although Fed rate hike bets have picked up in recent months – aided by surging inflation expectations – the outlook on rate increases is still seen as being a gradual liftoff. That is likely aiding equities.
Despite the Greenback’s strength, the Kiwi Dollar received a boost following this morning’s jobs data. The third-quarter employment change crossed the wires at 4.2% y/y, sharply higher than the consensus forecast of 2.7%, according to a Bloomberg survey. The upbeat headline figure was joined by an increase in the participation rate and a drop in the jobless rate, which highlights robust underlying labor market strength. The data is likely to fuel RBNZ rate hike bets.
Later today, Australia is due to see building permits for September drop on the wires, with analysts’ expectation of -2.0%, which is down from the 6.8% August figure. China will report Caixin services PMI data for October later today. Analysts are looking for a print of 53.1, down slightly from 53.4 in October. China’s economy is showing signs of slower growth, and analysts are keenly focused on stagflation signals. China’s Premier, Li Kequiang, stated earlier this week that the economy is facing downward pressures.
NZD/USD Technical Forecast
NZD/USD dropped overnight but caught an intraday bid once prices slipped below the psychologically imposing 0.7100 level. The rising 26-day Exponential Moving Average (EMA) appeared to provide a degree of confluent support. A sustained rebound will bring the 0.72 psychological level into focus. However, MACD looks to be nearing a cross below its center line, which indicates bearish energy.
NZD/USD 8-Hour Chart
Chart created with TradingView
--- Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter
