NZD/USD climbed to a fresh weekly high near 0.5725 on Friday after a weak US June payrolls report pared back expectations for near-term Federal Reserve tightening. Softer jobs data pulled the US Dollar lower and lifted risk-sensitive currencies, while traders now look to the Reserve Bank of New Zealand's rate decision on Wednesday.
A weaker US Dollar handed the New Zealand Dollar a fresh weekly high near 0.5725 during Friday's European session. The Kiwi was the strongest major against the Greenback, up 0.47%, as cooling Federal Reserve rate-hike bets improved the appeal of antipodean currencies.
Weak payrolls reset Fed expectations
The move traced back to the US June Nonfarm Payrolls report, which came in far softer than markets expected. Payrolls rose by just 57K, well below the 110K forecast. The labor force participation rate also dropped to 61.5%, its lowest in over five years, a sign of emerging softness after a weak ADP print and a soft ISM Manufacturing PMI earlier in the week.
Traders responded by dialing back hawkish Fed prospects. The CME FedWatch tool shows the odds of at least one hike at the September meeting have slipped to 53.2% from almost 64% on Wednesday. As a result, the US Dollar Index traded 0.15% lower near 100.70, while S&P 500 futures rose 0.3% toward 7,500, signaling demand for riskier assets.
China data and the RBNZ in focus
Support for the Kiwi also came from abroad. China's services purchasing managers' index stayed in expansionary territory, and given New Zealand's close trade ties with China, that data acted as a proxy prop for the currency.
Attention now shifts to the Reserve Bank of New Zealand's decision on Wednesday, where it is expected to raise the Official Cash Rate by 25 basis points to 2.5% from 2.25%. However, some domestic commercial banks have recently backed away from expecting an immediate hike, leaving the path ahead less certain.
Technicals point to a test of resistance
On the charts, NZD/USD trades near 0.5725, approaching resistance at 0.5733, the level of its 20-day Exponential Moving Average. A recovery in the 14-day Relative Strength Index into the 40-60 zone suggests the bearish momentum has faded. A daily close above the 20-day EMA would open the way toward 0.5800, while a fall below the June 14 low at 0.5630 would expose the November 2025 low at 0.5580.
Sources: FXStreet, TradingKey
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