NZD/USD makes a minor rebound from a one-month low, but little more buying is seen. For the risk-averse Kiwi, a rising USD and the risk-off atmosphere operate as a headwind.
The underlying environment favors the possibility of the pair’s current slide continuing. Near the 0.6300 level, the NZD/USD pair finds some support and recovers a few points from a one-month low reached earlier this Monday. On the other hand, spot prices find it difficult to benefit from the change and are still at risk of extending the abrupt fall from the highest level since June 2022, reached last week.
The NZD/USD pair’s upward potential is constrained by several variables that help the US Dollar build on Friday’s robust rebound from a nine-month low. Investors were obliged to lower their expectations for an impending stop in the Fed’s cycle of tightening monetary policy as a result of the positive US monthly employment report. This further supports the safe-haven buck and works against the risk-sensitive Kiwi and the general risk-off climate.
Even the most optimistic predictions were outperformed by the headline NFP print, which revealed that the US economy created 517K new jobs in January. In addition, the unemployment rate surprisingly fell to 3.4% in the reported month, highlighting the resilience of the US job market overall. This may enable the Fed to continue rising interest rates, which would raise US Treasury bonds’ yields and support the US dollar.
Meanwhile, worries about economic headwinds brought on by the constant increase in borrowing prices are fueled by anticipation that the US central bank would maintain its hawkish posture for extended periods. Additionally, poor quarterly earnings announcements from tech businesses cause the share markets to drop further. The NZD/USD pair will likely see more losses given the virtual environment, which is heavily skewed in favour of the USD bulls.
The US economy is not expected to reveal any significant market-moving economic data on Monday, leaving the Greenback vulnerable to changes in US bond rates. In addition, the general risk mood may impact the USD price dynamics and help provide short-term trading opportunities around the NZD/USD pair.