NZD/USD challenging 10-D SMA on jobs data beat, but running out of steam

• ,NZD rallies on jobs data.
• NZD/USD to remain capped below 0.7320.

NZ jobs employment change was a beat and so to was the participation rate. The unemployment rates were lower and all in all, the report was slid. Currently, NZD/USD is trading at 0.7344, up 0.59% on the day, having posted a daily high at 0.7353 and low at 0.7299, also supported by a strong dairy auction overnight.

• NZ Q4 Unemployment rate 4.5% (expected 4.7%)
• Employment change 0.5% q/q (exp 0.4%)

Dairy prices insights - ANZ

NZD/USD opened around 0.7325 with Europeans bidding up the bird after the bear pressure in Asia with NZD/JPY a weight due to risk-off flows. Wall Street was again heavy and thus the Kiwi was lower as caught up in the malaise once again. However, support came in below 0.7270 when the yen weakened off and after the dairy prices drove in demand. GDT Price Index was +5.9% and WMP were up +7.6%  allowing for a close around 0.7315. The jobs data has propelled the bird to challenge the 10-D SMA.

Analysts review

Analysts at ANZ explained that the topside resistance at 0.7320 is expected to provide a cap while downside pressure could come from Q4 labour market data unwinding some of its strength from the previous quarter and ahead of the RBNZ. "The US trade balance recording its widest deficit since October 2008 won’t help long-term USD sentiment and trade challenges either," the analysts added.

NZIER's Shadow Board recommends OCR on hold

NZD/USD levels 

Daily sticks are less bullish with a test below the 21-D SMA at 0.7298 and recoveries are unable to break the 10- D SMA so far, at 0.7336. 0.7260 is a support for now while 0.7190 is a major level for the bears to target. However, the indicators are more neutral with RSI picking up from 30 on the 4hr sticks. A correction towards 0.7420 needs to close above 0.7320/30 for it to have any conviction, (above the 100-4hr SMA).