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NZD/USD is correcting from a 30-month bottom reached at the beginning of the week, trading 0.2% higher at the time of writing in weak holiday market conditions. The NZD/USD exchange rate has been between 0.5592 and 0.5616 thus far.

Overall, the mixed US Nonfarm Payrolls data was bullish for the greenback and US rates, and a pain for the Federal Reserve as it confronts inflation headwinds ahead of this week's US Consumer Price Index and US Retail Sales data. The bird dropped after the release of the data and moved in on a test below 0.5600. As depicted in the charts below, the price has risen at the start of the week to confront opposition in the near future.

Traders will also eagerly await the minutes from the previous Fed meeting. The September dot plot shows a higher-than-anticipated Fed Funds terminal rate of 4.625%, with a very uniform distribution of dots around this level, according to analysts at TD Securities. "The question is how much of this was discussed during the September meeting. Given the core CPI inflation trends, the tone of these discussions was likely more hawkish, upsetting the current dovish pivot markets narrative.

On Monday morning, analysts at ANZ Bank stated in a note that market expectations for Fed rate hikes increased over the weekend, providing the US usd a boost. This caused the New Zealand dollar to retrace back below 0.56.

While the figures exceeded estimates and the unemployment rate decreased, the pace of job creation slowed and monthly wage increase was in line with expectations. The USD/JPY exchange rate is approximately 2.2% higher than it was late last Tuesday, and all eyes are now on US CPI data later this week.

"Local variables simply do not feature, and anecdotally, New Zealand's current account deficit is garnering more unwelcome attention. In a world where US interest rates are leading the way higher, the NZD requires positive rather than negative attention, which appears to be missing at the moment.

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