NZDUSD on Friday dropped -0.12% to 0.59980. Week ending 2024-08-09 rose 0.86%. What’s going on.

NZDUSD Analysis

Performance
Period	Pct	Chg	Momentum
Friday	-0.12%	-7.3 Pips
Week 2024-08-09	0.86%	51 Pips	August	0.78%	46.2 Pips

Upcoming key events for the new week (London Time)

Tue 01:30 PM PPI excluding Food and Energy sectors (12-mth)
Wed 03:00 AM RBNZ Interest Rate Decision (Official Cash Rate)
Wed 01:30 PM CPI Inflation Rate (1-mth)
Wed 01:30 PM CPI Inflation Rate (12-mth)
Thu 01:30 PM Initial Unemployment Insurance Claims
Thu 01:30 PM Monthly Retail Trade (1-mth)

What happened over the week

In the United States, the Department of Labor reported a drop in initial unemployment insurance claims for the week ending August 3rd. The claims fell to 233,000, down from the revised figure of 250,000 from the previous week. This suggests an improvement in the U.S. labor market, indicating that fewer individuals are filing for unemployment benefits. This kind of data generally points towards a stronger job market and potentially greater confidence in the U.S. economy.

In New Zealand, the Reserve Bank of New Zealand (RBNZ) reported a decrease in inflation expectations for the third quarter, with the rate dropping to 2.03% from 2.33% in the second quarter. This decline suggests that businesses and consumers expect lower inflation in the near term. However, New Zealand’s unemployment rate rose to 4.6% in the second quarter compared to 4.3% in the first quarter, according to Stats NZ. On a slightly more positive note, the Labour Force Participation Rate increased marginally to 71.7% from 71.5%, indicating more people are either working or actively seeking employment. Additionally, the Labour Cost Index (LCI) for the second quarter rose to 0.9%, up from 0.8% in the first quarter, highlighting an increase in wage costs.

The mixed economic data from New Zealand and positive labor market news from the United States collectively weighed on the NZDUSD on Friday, causing it to drop by 0.12% to 0.59980. Although the pair rose by 0.86% over the week ending August 9th, the recent economic updates induced a bearish sentiment. The drop in inflation expectations in New Zealand limits the need for aggressive monetary policy tightening by the RBNZ, while the rise in the unemployment rate adds concerns about the country’s economic health. Conversely, stronger U.S. job market data supports a robust U.S. economy, potentially leading to higher interest rates by the Federal Reserve. This divergence in economic prospects between the two countries created downward pressure on the NZDUSD pair.

From X (Twitter)

Latest release: Unemployment rate at 4.6 percent.https://t.co/PCfNIzjytY pic.twitter.com/c1bIgYC5zA

— Stats NZ (@Stats_NZ) August 6, 2024

What can we expect from NZDUSD for the new week and what happened on Friday?

NZDUSD on Friday dropped -0.12% to 0.60. Price is above 9-Day EMA while Stochastic is rising. For the week ending 2024-08-09, the pair rose 0.86% or 51 pips higher.

Looking ahead, NZDUSD looks bearish as the pair posted lower in Friday trading session.

For the new week, our technical outlook looks bullish, immediate upside resistance level at 0.61 (WR1) with break above could target 0.61 (WR2). On the downside, we are looking at week low of 0.59 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.60 would suggest bullish bias after recent positive movement.

For the month of August, NZDUSD is up by 0.78% or 46.2 pips higher.

Weekly key levels to watch out:

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