NZD/USD skids below 0.6100 as USD Index attempts rebound ahead of US Employment data
- NZD/USD has slipped below 0.6100 as investors turn anxious ahead of US NF data.
- The USD Index has rebounded firmly after correcting to near 105.13, portraying a recovery in the risk-off mood.
- An increment in the labor cost index will confirm that fears of persistent inflation conveyed by Fed Powell were real.
The NZD/USD pair was struggling to firm its feet above the round-level resistance of 0.6100. The Kiwi asset has surrendered the aforementioned resistance in the Asian session as the US Dollar Index (DXY) has attempted a recovery after a corrective move to near 105.13. A recovery move from the USD Index was highly anticipated as investors usually get anxious ahead of any critical event.
The FX domain is expected to remain on tenterhooks ahead of the release of the United States Nonfarm Payrolls (NFP) data. As per the projections, the US economy has recorded a jump in the number of payrolls by 203K in February. The Unemployment Rate is seen unchanged at 3.4%. Apart from them, the economic indicator which could spoil market mood is the Average Hourly Earnings data.
Higher wages offered by the US firms to bring fresh talent on board due to a shortage of labor are offsetting the impact of rate hikes from the Federal Reserve (Fed). Going forward, the economic data is expected to accelerate further to 4.7% from the former release of 4.4%. An increment in the labor cost index will confirm that fears of persistent inflation conveyed by Fed chair Jerome Powell were real and more aggressive rates are in pipeline to strengthen monetary tools further.
On the New Zealand front, weak China’s Consumer Price Index (CPI) data is indicating that the domestic demand in the Chinese economy has not shown an expected recovery despite the reopening measures. It is worth noting that New Zealand is one of the leading trading partners of China and lower demand in China could weaken NZ exports and eventually impact the New Zealand Dollar.