NZD/USD Maintains a Defensive Stance Above 0.6300 During The New Zealand Vacation, With Powell Of The Federal Reserve In Focus
In a three-day downturn, the NZD/USD exchange rate oscillates around the intraday low and is modestly sold. New Zealand's markets are closed due to the Waitangi Day event. Strong US data and renewed geopolitical concerns about China weigh on Kiwi prices. A light calendar in New Zealand highlights Fed Chair Powell's response to recent hawkish market signals for a new impetus.

NZD/USD continues downbeat as it flirts with crucial short-term support near 0.6300 during early Monday trade in Asia, following a gap to the downside to start the week. In doing so, the Kiwi pair validates the market's risk-averse sentiment and stronger US data despite the New Zealand (NZ) market holiday.
The market sentiment deteriorates as a result of good US data reinforcing the Federal Reserve's (Fed) hawkish inclination and the geopolitical tension surrounding China.
In spite of this, the US Bureau of Labor Statistics (BLS) stunned the markets by reporting that Nonfarm Payrolls (NFP) increased by 517K in January, compared to 185K predicted and 260K (upwardly revised) the previous month. Notable is that the Unemployment Rate fell to 3.4% from 3.5% previously and 3.6% predicted, but Average Hourly Earnings decreased during the month in question.
In addition to the headline US employment data, the rebound in the US ISM Services PMI from 49.2 to 55.2 versus the predicted 50.4 also supported the rise in US Treasury bond yields and the US Dollar. In spite of this, the benchmark 10-year US Treasury bond yields increased by the highest since late September 2022 to reclaim the 3.52% level by the conclusion of the turbulent week.
On the other hand, the current uncertainties surrounding the United States and China before of this week's US diplomat visit to China also dampen the market's appetite for risk. "On Saturday, a US military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina, a week after it first violated US airspace and sparked a dramatic — and public — spying tale that strained Sino-American relations," reported Reuters.
As a reflection of sentiment, S&P 500 Futures fall 0.40 percent, while 10-year US Treasury note yields stay sluggish near 3.52% as of press time.
Last week's employment report in New Zealand reduced pressure on the Reserve Bank of New Zealand (RBNZ) to move quickly. This week's weak domestic economic calendar will also allow NZD/USD buyers to take a breather.
However, Tuesday's speech by Federal Reserve (Fed) Chairman Jerome Powel and Friday's US UoM Consumer Sentiment Index for February, in addition to the University of Michigan's 5-year Consumer Inflation Expectations, will be vital for new impetus.
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