NZD/USD: rallies up to test bears commitments at the 0.72 handle after NFP miss

Currently, NZD/USD is trading at 0.7198, up 0.35% on the day, having posted a daily high at 0.7209 and low at 0.7150.

NZD/USD has rallied after the nonfarm payrolls report although was one of the weakest pairs this week on a resurgence in the dollar, and indeed has a lot of catching up to do on this data.

US: Total nonfarm payroll employment increased by 156,000 in August

Nonfarm payrolls arrived at +156k in August, private +165k, both well below expectations. The unemployment rate was +0.1 to 4.4% and the participation rate was unchanged at 62.9%. There was a -41k net revision to June-July payrolls. Overall, this was a weak report and the dollar is sold off across the board. However, given the positive GDP numbers, this week and the fact that average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $26.39, after rising by 9 cents in July, there are still some positives around the US economy.

This data comes ahead of next month's FOMC announcements where some analysts expect the Fed to lay out plans for reducing its balance sheet. “Back-of-the-envelope calculations warn that Q3 GDP may be cut by 1 percentage point and Q4 by 0.5 percentage point before rebounding in 2018," explained analysts at Brown Brothers Harriman. "We do not think it impacts the Fed's decision to begin reducing its balance sheet.  We expect that announcement on Sept 20 to begin in Q4.  By the December meeting, the rebuilding will be underway, and we don't expect the GDP impact to prevent the Fed from hiking again.  We emphasize the continued strength of the labor market and the broader financial conditions, which have evolved in the opposite direction than the Fed sees fit,” the analysts explained.

NZD/USD levels

To the upside, 0.7200/30 guards 0.7280/00 as the next key and initial resistance area ahead of the 0.7337 recent highs and 0.7370 (9th Aug high). To the downside, the daily cloud base is located at 0.7139 and 0.7127 is the June 6 low and 0.7100.  To the upside, 0.7200/30 guards 0.7280/00 as the next key and initial resistance area ahead of the 0.7337 recent highs and 0.7370 (9th Aug high).