NZD/USD – New Zealand Dollar Subdued, US Jobless Claims Disappoints

NZD/USD is showing limited movement on Thursday, following the downward trend which have marked the past two daily sessions. The pair is trading at the 0.69 line in the North American session. There are no New Zealand releases on the schedule. In the US, Unemployment Claims jumped to 274 thousand, higher than expected. On Friday, the US releases three key employment indicators – Average Hourly Earnings, the Unemployment Rate and Nonfarm Payrolls.

The New Zealand dollar posted losses earlier in the week, following mixed economic numbers. The GDT Price Index, a bi-monthly dairy auction, declined 1.4%. This marked a sharp downturn compared to a gain of 3.8% in the previous reading. Employment numbers were a mix. Employment Change posted a gain of 1.2% in the first quarter, beating the forecast of 0.6%. At the same time, the unemployment rate jumped to 5.7% in March, up from 5.3% a month earlier. The estimate stood at 5.5%. Wage growth remains low and has weighed on inflation levels, which remain well below the central bank’s target of 1% – 3%. The RBNZ has expressed its concern about weak inflation and the strong New Zealand dollar, and lowering interest rates could help address both of these pressing issues.

Is the rosy US labor market showing signs of slipping? Unemployment Claims jumped to 274 thousand, marking the third straight week that the indicator has risen. This reading was higher than the forecast of 261 thousand, and marked a five-week high. This release comes on the heels of ADP Nonfarm Payrolls, which dropped sharply in April to 156 thousand. This was the weakest reading in over two years, and surprised the markets, which have grown accustomed to releases above the 200-thousand level. We’ll get a look at the all-important Nonfarm Payrolls on Friday. If the NFP report misses expectations, the US dollar could respond with losses. The employment picture has been a bright spot in the US economy, but consumer confidence and spending have not kept pace. Last week, UoM Consumer Sentiment dipped to 89.0 points short of the estimate of 90.3 points. This also marked the fourth straight drop for the key indicator. Consumer spending is a key engine of economic activity, and softer numbers in the first quarter were an important reason that US GDP weakened in the first quarter, with a lukewarm reading of 0.5%.

NZD/USD Fundamentals

Thursday (May 5)

  • 7:30 US Challenger Job Cuts. Actual 5.8%
  • 8:30 US Unemployment Claims. Estimate 261K. Actual 274K
  • 10:30 US Natural Gas Storage. Estimate 69B
  • 11:30 US FOMC Member James Bullard Speaks
  • 19:15 US FOMC Member James Bullard Speaks

Upcoming Key Events

Friday (May 6)

  • 8:30 US Average Hourly Earnings. Estimate 0.3%
  • 8:30 US Nonfarm Employment Change. Estimate 203K
  • 8:30 US Unemployment Rate. Estimate 5.0%

*Key releases are highlighted in bold

*All release times are EDT

NZD/USD for Thursday, May 5, 2016

NZD/USD May 5 at 10:30 EDT

Open: 0.6886 Low: 0.6872 High: 0.6916 Close: 0.6895

NZD/USD Technical

S3 S2 S1 R1 R2 R3
0.6542 0.6621 0.6738 0.6897 0.7011 0.7100
  • NZD/USD posted gains in the Asian session. The pair was choppy in European trade and has posted slight losses early in the North American session.
  • 0.6897 remains fluid and is currently weak resistance. It could break in the North American session
  • 0.6738 is providing strong support

Further levels in both directions:

  • Below: 0.6738, 0.6621 and 0.6542
  • Above: 0.6897, 0.7011, 0.7100 and 0.7231
  • Current Range: 0.6738 to 0.6897

OANDA’s Open Positions Ratio

The NZD/USD ratio has shown movement towards long positions on Thursday. Long positions have a majority (55%), indicative of trader bias towards NZD/USD moving to higher levels.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.