Kiwi buyers fail to build on risk rebound after better labour market data
- New Zealand Q2 unemployment rate 3.9% (vs. expected at 4.3%)
The pair fails to find further upside momentum after the positive headlines earlier in the day as the dollar also holds firmer following a turnaround in risk trades.
Price broke above the 100-hour MA (red line) earlier on the better-than-expected labour market report but failed to hold a break above the near-term resistance around 0.6578. Now, sellers are back in near-term control as price falls below the 100-hour MA.
Much like AUD/USD, the pair has been on a horrid run of form since the second-half of July. Of note, the pair has declined in 11 out of the last 12 trading days. A drop today would make that 12 out of 13 daily declines.
The key risk event for the kiwi is the RBNZ meeting tomorrow, with markets pricing in a ~98% odds of a 25 bps rate cut. Markets are also eyeing one more potential rate cut by the central bank before the year-end so the language tomorrow will be one to watch.
In the bigger picture, NZD/USD is holding just above the 0.6500 handle for now with the year’s low of 0.6482 sitting nearby. If sellers are to find more momentum to the downside, those levels need to be breached first.
The key level to watch out for in any decent upside retracement will be the 0.6600 handle as well as the 200-hour MA (blue line) @ 0.6595. Should buyers manage to seize near-term control again, we could see an extension higher in the short-term at least.