- NZD/USD rose more than 1% to 0.5990, the highest since mid-October.
- The US reported a weak NFP, prompting a sharp drop in US yields and hawkish bets on the FED.
- Eyes on October US inflation data.
On Friday, NZD/USD rallied, led by the US dollar, which faced significant selling pressure after a soft labor market eased, prompting a decline in US Treasury yields and hawkish bets on the Federal Reserve (Fed) at its December meeting. No relevant data has been published on the Kiwi side.
The latest data from the US Bureau of Labor Statistics hit market expectations as Nonfarm Payrolls for October fell short of projections. The report revealed an increase of 150,000 jobs in the US economy, below expectations of 180,000 and showing a slowdown from the revised previous figure of 297,000. In addition, the unemployment rate rose to 3.9% over the same period, beating the forecast of 3.8%.
Additionally, average hourly earnings for October showed a sluggish 0.2% month-on-month growth, but managed to climb to 4.1% year-over-year, beating expectations of 4% and beating the previous reading of 4.3%.
At the same time, US Treasury yields continued to fall, with the two-year yield hitting its lowest level since early September at 4.83%. Correspondingly, longer-term 5- and 10-year rates retreated to around 4.50% and 4.54%, respectively. As for the December session FedThe CME FedWatch Tool shows that the probability of a 25 basis point hike has fallen to just 9%, adding to the dollar’s selling pressure.
On November 14, the US will report October inflation data, which will be closely watched by investors to continue modeling their expectations.
NZD/USD levels to watch
Based on the daily chart, NZD/USD maintains a neutral to bullish technical outlook, suggesting bulls are making moves to regain control and gaining significant momentum. The relative strength index (RSI) is maintaining a positive slope above its midline, while the moving average histogram (MACD) is showing larger green bars.
Despite the pair being above the 20-day simple moving average (SMA), it is still below the 100 and 200-day, suggesting that the broader viewthe bears command.
Support levels: 0.5930, 0.5910, 0.5900.
Resistance levels: 0.6000, 0.6020 (100-day SMA), 0.6050.