The New Zealand dollar is down considerably in Wednesday trading. Currently, NZD/USD is trading at 0.7245, down 0.65% on the day.
New Zealand dollar stabilizes
The New Zealand dollar finds itself in calm waters this week, after taking the market on a roller coaster ride last week. NZD/USD posted sharp gains early last week, but then reversed directions and coughed up these gains late in the week. The catalyst for the steep decline was the sharp jump in US bonds yields, which boosted the US dollar. The 10-year yields climbed to a one-year high last week, but have now retreated. This led to the dollar rally quickly running out of steam, and the New Zealand dollar has been drifting throughout the week.
With the global economy tentatively emerging from the dark days of the Covid pandemic, the demand for New Zealand commodities is on the increase. This was reflected in the ANZ Commodity Prices index, which rose 3.3% in February. The index has reeled off five successive gains and is now at its highest level since April 2014.
In the US, the markets are keeping an eye on employment data. Earlier in the day, the ADP Nonfarm Employment Change release showed that the economy created 117 thousand, a rather weak gain. This was down from the previous release of 174 thousand and nowhere near the forecast of 203 thousand. The big question for investors is whether the weak ADP reading will be followed on Friday, when the official nonfarm payrolls report is released. The forecast stands at 185 thousand, and a significantly lower release could weigh on the US dollar.
NZD/USD Technical
- NZD/USD faces resistance at 0.7420. The next resistance line is at 0.7549, which has held since July 2017.
- There is support at 0.7149, followed by a support level at 0.7065
- The pair remains within striking distance of the 50-day moving average (MA), which is at 0.7205
