English
NZD/USD Remains Under Pressure Near 0.6250 Amid Good Friday Holiday, With Focus On US NFP data
The NZD/USD pair appears poised for a weekly loss after dropping the most in a month the day before. Negative sentiment enabled New Zealand traders to reverse the RBNZ-led rally. The US data raises recession concerns and weighs on commodity prices in Australia and New Zealand. NFP will be crucial, and more volatility is anticipated amidst a lackluster market presence.
During Good Friday's inactive Asian session, the NZD/USD maintains losses near 0.6245-40. Traders from New Zealand take a pause after the price plummeted the most in a month the day before. In addition to the lack of liquidity caused by the holidays, the cautious tone preceding the March US employment data also restrains the quote's immediate movement.
The most recent decline in the price could be attributed to the market's pessimism regarding the health of the world's largest economy, the United States, and concerns of contagion emanating from the same. Notably, the waning hawkish Fed wagers prevent the US Dollar from supporting the risk-off sentiment.
However, concerns of a recession increased after US Initial Jobless Claims improved to 228K for the week ending March 31, compared to 200K anticipated and an upwardly revised 246K the previous week. Notable is that the Challenger Job Cuts for the given month increased from 77,77K to 89,703K.
Since the beginning, the US data has been negative, particularly in terms of employment and economic activity, which has fueled concerns of a decline. Previously, US JOLTS Job Openings fell to a 19-month low in February, and March's ADP Employment Change figures of 145K also disappointed markets. In addition, the US ISM Services PMI for March decreased to 51.2 compared to 54.5 anticipated and 55.1 previously.
In addition to the US data, the Federal Reserve's (Fed) preferred indicator of economic health cites recession concerns, which impact on the NZD/USD exchange rate. According to Fed research, the 'near-term forward spread,' which compares the forward rate on Treasury bills 18 months from now to the current yield on a three-month Treasury bill, is the most reliable bond market indicator of an imminent economic contraction.
Domestically, the Reserve Bank of New Zealand (RBNZ) defies the general trend of halting rate increases and rather surprises the markets by increasing the benchmark rate by 0.50%. As a result, traders became more skeptical of the NZD/USD pair's prior rally and subsequently flooded the pair with additional strength in response to the aforementioned negative catalysts.
Wall Street benchmarks are licking their wounds, while 10-year and 2-year US Treasury bond yields remain under pressure despite recent consolidation around 3.30 percent and 3.83 percent, respectively. In spite of this, S&P 500 Futures record modest losses amid inactive markets.
Given the holiday-induced lull in market activity, today's US employment report may cause wild market swings, particularly in light of recent recession concerns and dismal US data. Consequently, the market anticipates the headline Nonfarm Payrolls (NFP) to be 240K, down from 311K previously, and the Unemployment Rate to remain unchanged at 3.6%.
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