NZ Jobs and Financial Stability Report Preview: NZD/USD

Softer than expected ISM manufacturing data overnight, possibly due to supply chain disruptions and the resumption of dovish Fed Speak saw the US dollar reverse Friday's gains.

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Another chance for the US dollar comes along in the form of US payroll data on Friday night. Market expectations are for a red hot rise in jobs of 950,000 and the unemployment rate to fall to 5.8% in April.

The Financial Stability Report (FSR) is likely to attract more interest than usual, due to rampant housing prices and following the addition of the housing market to the RBNZ’s remit.

RBNZ Governor Adrian Orr has previously stated that responsibility for cooling the housing market will fall on financial stability policy, rather than monetary policy.

However, given the unavoidable link, changes to financial stability policy aimed at slowing housing price rises will, in turn, impact monetary policy. With 60% of an OCR hike priced for August 2022, the FSR does have the potential to move the NZD/USD.

Then follows the labour market report, notoriously a volatile data set. New Zealand Finance minister Robertson was on the wires this morning saying he expects tomorrow's unemployment data to “bounce around a bit” after it unexpectedly fell to 4.9% in the previous quarter.

Based on the Finance Ministers' warning, tomorrow's jobs data also has the potential to be market-moving, particularly if too far either side of the 4.9% rate the market is expecting.

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Technically, the rejection into the end of last week from the .7286 high after reaching the first target at .7270 written about in our last article on the NZD/USD here is a setback to the bullish bias.

“leaning against a band of support between .7100c and .7070c, the preference is to consider buying dips towards .7150 in the NZD/USD, looking for a test of the layer of resistance between .7270 and .7300c.”

In light of this, the NZD/USD must remain above trendline support and recent lows .7165/45 to stay with a positive bias. Aware that should the NZD/USD break below .7165/45 and then below support at .7100/70, a retest of the .6943 low is possible.

NZ Jobs and Financial Stability Report Preview NZDUSD

Source Tradingview. The figures stated areas of the 4th of May 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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