The New Zealand dollar is in negative territory in the Wednesday session. Currently, NZD/USD is trading at 0.7032, down 0.31% on the day.
NZ dollar claws back to 70 level
It was a miserable month of March for the New Zealand dollar, which declined by 3.38%, its worst month since March 2020. The currency ended March below the 70 level, but has since crossed above this symbolic level.
Much of the kiwi’s woes were attributable to the strong rise in US Treasury yields, which provided a significant boost to the US dollar. Another factor that sent the New Zealand dollar reeling last month was a move by the government to curb speculation in the housing market, which has led to a sharp rise in the prices of houses and raised fears of a housing bubble. New Zealand’s economy has recovered well from the Covid pandemic, but an unwanted result has been a property boom, with speculators taking advantage of cheap mortgages to purchase homes, hoping to make a quick profit. The housing reforms announced by the government created a chill in the currency markets, as the New Zealand dollar fell over two percent after the measures were announced.
FOMC minutes could shake up US dollar
In the US, employment numbers are pointing to an accelerating labour market. Nonfarm payrolls blew the estimate of 652 thousand out of the water, with a gain of 915 thousand. This was followed on Tuesday by JOLTS job openings, which improved from 6.92 million to 7.37 million, well above the forecast of 6.91 million. These releases point to the labor market creating jobs at a much faster pace than expected.
How will the Federal Reserve respond to these strong job numbers? Fed members have repeatedly said that that rate hikes are off the table until the labor market recovered, telling the markets not to expect any hikes prior to 2024. With the employment recovery looking like it could be well ahead of schedule, will the Fed change its timeline for rate hikes? Investors will be looking for such clues in the FOMC minutes later today (18:00 GMT).
- On the upside, there is pressure on 0.7072. This is followed by resistance at 0.7112
- There is support at 0.6969, followed by support at 0.6906, which is protecting the round number of 0.6900
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