NZD/USD Slips Below 0.6050 After Hitting 8-Month High Amid NFP Jitters

NZD/USD Slips Below 0.6050 After Hitting 8-Month High Amid NFP Jitters

The New Zealand Dollar (NZD) pulled back from Thursday’s eight-month high of 0.6081, falling to 0.6030 during the Asian session on Friday. The NZD/USD pair came under pressure as the US Dollar (USD) regained some ground ahead of Friday’s key US Nonfarm Payrolls (NFP) report.

Stronger USD and Soft Labor Data Weigh on NZD/USD

Market sentiment was dampened by the latest US labor data:

• Initial Jobless Claims rose to 247,000, exceeding expectations of 235,000.
• NFP data for May is expected to show 130,000 new jobs, down from 177,000 in April.
• The unemployment rate is forecast to remain at 4.2%.

This combination of labor market softening and USD resilience has pulled the Kiwi lower after a brief rally.

Fed's Cautious Policy and Data Dependence Under Scrutiny

UBS Chief Economist Paul Donovan warned that the Federal Reserve’s data-dependent approach may risk policy error. According to Donovan, the lag in monetary policy impact and the unreliability of real-time data present a serious challenge for Fed Chair Jerome Powell, who remains cautious about any shift in policy direction.

Geopolitical Positives: Trump-Xi Call Reassures Markets

On a more optimistic note, global sentiment received a boost following a positive phone call between US President Donald Trump and Chinese President Xi Jinping. Trump indicated a willingness to reopen tariff negotiations, improving the risk appetite across markets.

Given China’s role as a key trading partner to New Zealand, developments in China’s economy are highly relevant to NZD traders. Investors are closely watching Monday’s release of Chinese data, including CPI, PPI, and trade balances.

NZD/USD Technical Outlook

• Resistance: 0.6081 (8-month high)
• Support: 0.6000 psychological level, followed by 0.5970
• A break below 0.6000 could trigger further downside, especially if the NFP data surprises to the upside

Outlook: NFP, China Data to Guide NZD/USD Direction

The near-term trajectory of NZD/USD hinges on:

• Friday’s NFP outcome, which will influence USD strength
• China’s economic prints on Monday, crucial for Kiwi due to trade linkage
• Fed's next move, as uncertainty around US growth continues to cloud global market confidence

Until then, the Kiwi remains exposed to headline risk and macroeconomic surprises.

Related Reads on Tredu:

• How NFP Impacts Forex Markets Like NZD/USD
• What China’s Data Means for the Kiwi
• Fed's Data Dependency Explained