Whilst the NZDUSD rests precariously above this important handle, with an expectation of improved employment and stronger dairy prices tomorrow, it is vulnerable to be knocked off of its perch, again, with any soft data.
Global Dairy Prices have been plummeting since the peak in 2013, but recently saw a reprieve with a +1.5% two weeks ago. The market consensus is for this to be repeated, and for employment to rise 0.6% q/q whilst unemployment falls to a 5-year low at 5.6%. If all goes well this should help the Kiwi Dollar remain firmly above 77c and target 0.78 and 0.785.
Unfortunately expectations require fulfilling, and if they’re not lead to disappointment and larger market moves.
With NZD hovering precariously above 16-month lows whilst the markets are aware RBNZ want the Kiwi Dollar lower, it is vulnerable to a stab below 77c. If GDT plummet noticeably and coupled with a surprise rise in unemployment, then we can expect a more directional bearish move down towards 0.76 and for it to remain capped by 77c leading up to Friday’s Nonfarm Payroll.
It will be the US which will have the final say in the closing price for NZD this week as they too release their employment figures. With the FED closely monitoring employment and inflation data we can be assured that any deviation from expectations will send ripples through the markets, with strong US data pushing the Kiwi down or poor US employment provides further support to NZDUSD.