NZ Dollar Under Pressure, US Nonfarm Payrolls Plummet
MarketPulse | May 06, 2016 09:19AM ET
NZD/USD has posted considerable losses on Friday, as the pair trades at 0.6830 early in the North American session. There are no New Zealand releases on the schedule. In the US, Nonfarm Payrolls dropped sharply to 160 thousand. Average Hourly Earnings posted a gain of 0.3% and Unemployment Claims remained at 5.0%, as both indicators matched their estimates.
US Nonfarm Payrolls was dismal in April, as the key indicator slid to just 160 thousand, well short of the forecast of 203 thousand. This marked the lowest reading in seven months. There was concern that NFP, one of the most important indicators, would post soft numbers after weak job numbers earlier this week. The ADP Nonfarm Payroll report dropped to 156 thousand, compared to an estimate of 205 thousand and Unemployment Claims jumped to 274 thousand, missing the estimate of 261 thousand. In other releases on Friday, wage levels showed no change, as Average Hourly Earnings posted a weak gain of 0.3%. The unemployment rate remained steady at 5.0%.
The New Zealand dollar posted mixed economic numbers, and is down about 150 points this week. The GDT Price Index, a bi-monthly dairy auction, declined 1.4%. This marked a sharp downturn compared to a gain of 3.8% in the previous reading. Employment numbers were a mix. Employment Change posted a gain of 1.2% in the first quarter, beating the forecast of 0.6%. At the same time, the unemployment rate jumped to 5.7% in March, up from 5.3% a month earlier. The estimate stood at 5.5%. Wage growth remains low and has weighed on inflation levels, which remain well below the central bank’s target of 1% to 3%. The RBNZ has expressed its concern about weak inflation and the strong New Zealand dollar, and lowering interest rates could help address both of these pressing issues.
What can we expect from the Federal Reserve in 2016? In the April policy statement, the Fed didn’t raise rates, but the message to the markets with regard to the US economy was one of cautious optimism. The statement noted continuing improvement in the labor market but added that it was keeping a watchful eye on low inflation levels. Fed policymakers are projecting two or even rate hikes in 2016, and have left the door open to a June hike. With the US releasing key employment numbers on Friday, the markets will be listening closely to the reaction of Fed policymakers, looking for clues regarding the next rate hike.
NZD/USD Fundamentals
Friday (May 6)
- 8:30 US Average Hourly Earnings. Estimate 0.3%. Actual 0.3%
- 8:30 US Nonfarm Employment Change. Estimate 203K. Actual 160K
- 8:30 US Unemployment Rate. Estimate 5.0%. Actual 5.0%
*Key releases are highlighted in bold
Get The News You Want
*All release times are EDT
NZD/USD for Friday, May 6, 2016
NZD/USD May 6 at 9:05 EDT
Open: 0.6887 Low: 0.6808 High: 0.6891 Close: 0.6830
NZD/USD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.6542 | 0.6621 | 0.6738 | 0.6897 | 0.7011 | 0.7100 |
- NZD/USD has posted losses in the Asian and European sessions
- There is resistance at 0.6897
- 0.6738 is providing strong support
Further levels in both directions:
- Below: 0.6738, 0.6621 and 0.6542
- Above: 0.6897, 0.7011, 0.7100 and 0.7231
- Current Range: 0.6738 to 0.6897
OANDA’s Open Positions Ratio
The NZD/USD ratio has shown little movement on Friday. Long positions have a majority (57%), indicative of trader bias towards NZD/USD reversing directions and moving to higher levels.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.