NZD/USD struggles below 0.6500 despite upbeat NZ trade numbers, US ADP, NFP eyed

• NZD/USD fades bounce off weekly low after two-day downtrend.
• New Zealand Q1 Terms of Trade Index matches 0.5% figures.
• Firmer US data, recession fears join sour sentiment to weigh on prices.
• US ADP Employment Change, Factory Orders and Aussie trade numbers will be eyed for immediate directions, risk catalysts are crucial.

NZD/USD renews intraday low to 0.6480 as bears keep reins for the third consecutive day to Thursday’s Asian session. In doing so, the Kiwi pair justifies the market’s risk-off mood, as well as a firmer US dollar, while paying a little heed to the upbeat trade data at home.

New Zealand’s Terms of Trade Index for the first quarter (Q1) of 2022 rose 0.5%, matching forecasts, while reversing the previous -1.0% figures.

It’s worth noting that the growing fears of recession, as well as faster monetary tightening by the global central banks, keep weighing on the NZD/USD prices. On the same line could be the latest trade/geopolitical tussles surrounding China and Russia.

Strong US data and Fed Beige Book raised concerns over economic growth and inflation in the US while Fed speakers renewed chatters surrounding a faster rate hike trajectory. That said, the US ISM Manufacturing PMI for April rose to 56.1 versus the 54.5 expected and the 55.4 prior. Further, the US JOLTs Job Openings eased below 11.8 prior readings but matched 11.4 market forecasts. Furthermore, the monthly release of the Fed Beige Book showed that the majority of districts indicated slight or modest growth while most informed of continued price rises. Also, three districts, out of 12, expressed concerns about a US recession.

St. Louis Federal Reserve Bank President James Bullard also raised concerns about the US recession as he repeated that a pace of 50 bps hike per meeting is a “good plan” for now. On the same line, Federal Reserve Bank of Richmond President Thomas Barkin mentioned, “You can't find a recession in the data or actions of business execs,'' speaking on Fox Business.

Recently, Reuters came out with the news suggesting the US readiness to implement a ban on Xinjiang goods whereas comments from China's Ambassador to Australia, Xiao Qian, hint at no relief to Aussie business houses from Beijing’s ban despite the change in government.

Against this backdrop, S&P 500 Futures drop 0.20% whereas the US 10-year Treasury yields retreat from a two-week high, down 1.2 basis points (bps) to 2.91% of late.

Looking forward, Australia’s trade figures for April and risk catalysts may offer immediate directions but major attention will be given to the US ADP Employment Change for May, expected 300K versus 247K prior.

Also read: US ADP Employment Change May Preview: The labor market recedes from center stage

Technical analysis

A three-week-old support line and 21-day EMA restrict short-term NZD/USD downside near 0.6470. Recovery moves, however, remain elusive until the quote rises past May’s high near 0.6570.