NZD/USD cuts post-NFP losses around 0.6600 with eyes on China open

  • NZD/USD offers no major changes to start the week’s trading, falling sharply on Friday.
  • The US jobs report for January boosted returns, the dollar rebounded the day before.
  • Escalating geopolitical tensions are also putting downward pressure on the Antipodians.
  • China’s return after a week of Lunar New Year will be important to watch, Caixin Services PMI to decorate the calendar.

NZD/USD is defending 0.6600 while showing a corrective pullback from a 1-week low after Friday’s strong sell-off. That said, the Kiwi pair is hovering around 0.6615 as of Monday morning press time in Asia.

The quote rose the most on a weekly basis since late December amid general US dollar weakness. However, Friday’s US jobs report sparked the greenback’s rebound.

On Friday, the US Bureau of Labor Statistics (BLS) offered a positive surprise to US Dollar bulls with the January jobs report. The nonfarm payrolls (NFP) headline rose 467,000 from the median forecast of a rise of 150,000 and a previously revised 510,000, while the jobless rate rose to 4.0% vs. 3.9% in December, compared to expectations of an unchanged figure. It should be noted, however, that the U6 underemployment rate extended the run south to 7.1% from 7.3% in the previous reading. Average hourly earnings were also encouraging, as they jumped sharply to 5.7% from 4.9%.

Additionally, hawkish comments from Fed policymakers join Russia-bound fears in challenging NZD/USD bulls even as US Dollar weakness kept the pair in the spotlight heading into Friday. Recently, the US National Security Advisor said that the Russian invasion of Ukraine could happen any day.

Amid those games, the US dollar index (DXY) fell the most since early November 2021 before beginning a five-day slowdown only to rebound from a three-week low the day before. Additionally, 10-year US Treasury yields hit their new high since January 2020, with the latest addition being 8.9 basis points (bps) at 1.916%. It should be noted, however, that stocks were surprisingly mixed.

Looking ahead, China’s Caixin Services PMI for January, expected at 52.9 vs. 53.1 previously, will be important to watch for near-term direction. It should be observed that China is returning to trade after a week-long vacation and missing recent hawkish games, which may push them to take impressive steps to defend the yen and this may help NZD/USD prices to rise. to maintain. the last bounce.

Technical analysis

Failures to break above the previous August support line around 0.6655 at the latest is leading NZD/USD bears to the yearly low near 0.6530.

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