NZD/USD trading above 0.7000 handle

• Earlier in the day, the Non-Far Payroll came below expectations at 164K versus 192K forecast by analysts while wage’s growth (average hourly earnings) also disappointed at 2.6% versus 2.7% forecast by analysts.
• The NZD/USD dipped below the 0.7000 handle but now the market is consolidating above it. 

The NZD/USD is trading at around 0.7014 down 0.39% on Friday. 

The main feature of the day and probably also of the week (excluding FOMC on Wednesday) was the release of the US Non-Farm Payroll and wage’s growth. 

Earlier in the US session, the NFP report for April came below expectations at 164K versus 192K forecast by analysts. The wages (average hourly earnings) also came below estimates at 2.6% year-on-year against 2.7% expected. 

The market reaction on the NZD/USD has been initially a spike up to 1.7034 followed by a 40-pip sell-off to 0.6994. In a knee-jerk reaction USD was first sold across the board on the disappointing US data, but half an hour after the NFP release, investors were back on the USD long trade and the kiwi dropped. 

Analysts argue that the NFP is indeed soft but not that bad as to stop the Fed in his policy normalization path. “Employment rose 164,000, but when you add in 30,000 upward revisions to the past two months then it is pretty much in line with the market expectation for a 193,000 rise,” notes James Knightley, Senior Economist at ING. “It isn’t a particularly exciting report and certainly shouldn’t alter market expectations for monetary policy in any meaningful way, but it just feels a bit soft given the state of the economy. A strong growth and firm inflation environment will keep the Fed in tightening mode and we continue to look for three further interest rates rises this year, starting with 13 June,” added the analyst.

Next week will be a rather light calendar on the US data front while the New Zealand Reserve Bank will release its quarterly Monetary Policy Statement on Wednesday. 

NZD/USD 4-hour chart 

The NZD/USD is in a bear trend and immediate support is seen at the 0.7000 handle and at the 0.6985 cyclical low while resistance is seen at 0.7050 swing high and at 0.7100 swing high and figure.