Quick Look:
- Current Trading Status: NZD/USD trades at 0.6175, up from 0.6150.
- USD Weakness: USD depreciates on Fed rate cut expectations, with the US Dollar Index near 104.00.
- Chinese Economic Data: Positive Chinese PMI supports NZD due to close economic ties.
- Upcoming US Data: Key releases like ADP Employment and ISM Services PMI are expected.
- Price Forecast: Bullish trend with targets at 0.6228 and 0.6280; key support at 0.6140.
In the early Asian session on Wednesday, the NZD/USD pair experienced mild gains, trading above the 0.6150 mark. Currently, the price stands at approximately 0.6175. Therefore reflecting a steady increase influenced by various economic factors.
USD Weakens with Fed Rate Cut Probability at 54.9%
The primary driver behind the recent movements in the NZD/USD pair is the weakening of the US Dollar (USD). This depreciation stems from rising expectations of a potential rate cut by the Federal Reserve (Fed) in its upcoming September meeting. The US Dollar Index measures the greenback against a basket of six major currencies. Meanwhile, the currency has slipped to multi-week lows, hovering near the 104.00 level. Market sentiment has shifted, with the FedWatch tool now indicating a 54.9% probability of a rate cut in September, up from 49% just a week ago. The latest economic data contribute to this outlook, including a notable decrease in the JOLT’s Job Openings, which fell to 8.059 million in April from a previous 8.355 million, missing the expectation of 8.34 million.
NZD Boosted by China’s PMI Rising to 51.7
Positive economic data from China has also bolstered the New Zealand Dollar (NZD), given its close economic ties and the NZD’s status as a China-proxy currency. The Caixin Manufacturing Purchasing Managers’ Index (PMI) for May came in at 51.7, an improvement from the previous reading of 51.4 and above the consensus forecast of 51.5. This indicates strong production levels in China’s consumer goods sector, providing support to the NZD.
Focus on US ADP Employment and Services PMI Data
Attention now turns to several significant US economic data releases scheduled for Wednesday. These include the US ADP Employment Change, the Final S&P Global Services PMI, and the ISM Services PMI, with an estimated figure of 50.5, up from the previous 49.4. These releases will be closely watched as they could further influence the USD and, by extension, the NZD/USD pair.
NZD/USD Bullish Target: 0.6228 with Support at 0.6140
As of 5th June 2024, the short-term trend for NZD/USD remains bullish. Besides, analysts are setting an initial target of 0.6228, with an extended target of 0.6280. Key technical levels to watch include a support level of 0.6140 and a resistance level of 0.6240. The 50-day Exponential Moving Average (EMA50) is currently supporting the bullish outlook, which would be invalidated if the price falls below 0.6140.
The NZD/USD pair is experiencing a phase of mild gains, underpinned by USD weakness and robust Chinese economic data. Market participants will be keenly observing upcoming US economic reports for further direction. The interplay of these factors continues to shape the currency pair’s trajectory, making it a dynamic and closely watched aspect of the forex market.
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