NZD/USD remains near session lows after PMI data
After slipping to a fresh session low at 0.7058 in the early NA session, the NZD/USD gained some traction as the greenback struggled to extend its gains against its major rivals despite the better than expected PMI data. As of writing, the pair was trading at 0.7064, still down 0.27% on the day.
Earlier in the session, stronger than expected private sector employment report from the U.S. boosted the greenback and the US Dollar Index surged to a daily high at 97.26. Furthermore, Federal Reserve's Governor Jerome Powell adopted a hawkish note and said that the spending and the jobs data were suggesting that the economy was on the path to higher inflation. However, the DXY struggled to preserve its bullish momentum as investors refrain from making large bets ahead of tomorrow's NFP report.
- US: Private-sector employment increased by 253,000 from April to May - ADP
Both the Markit and ISM PMI reports revealed that the manufacturing sector continued to expand in May. Further details of the reports highlighted that the employment sub-indexes increased, ramping up the expectations for a strong NFP reading tomorrow. Nevertheless, the strength of the labor market in the U.S. is not a surprise for the participants and a June rate hike seems definite as the CME Group FedWatch Tool shows the probability at 96%.
- US ISM manufacturing points to ongoing strong growth - ING
Technical outlook
Despite the fluctuation witnessed on Thursday, the pair is trading in a tight 40-pip range. After refreshing its highest level since early March yesterday, the pair seems to went into a technical correction phase as the RSI on the daily graph is pulling away from 70 to 50 handle. However, the 200-DMA at 0.7065 formed a strong support and a daily close above that level could open the door for further losses. 0.7015 (100-DMA) could be the initial target before 0.6960 (50-DMA). On the upside, 0.7120 (May 31 high/3-month high) could be seen as the first technical resistance ahead of 0.7200 (psychological level) and 0.7245 (Feb. 23 high).