NZD/USD re-tested YTD lows around 0.6060 post-upbeat US economic data, ahead of NFP

• NZD/USD stumbles below 0.6100 on risk-aversion after positive US data.
• Fed odds of a 75 bps increase increased to 91%, as shown by money market futures STIRs.
• New Zealand’s Trade data and US Nonfarm Payrolls report. Eyed.

The NZD/USD slides to multi-week lows around 0.6060 on Thursday as the New York session winds down, after US data portrays solid factory activity while the labor market continues to be robust, keeping Fed policymakers “hopeful” of achieving a soft landing, despite tightening conditions.

The NZD/USD is trading below its opening price after hitting a daily high of 0.6122. Still, it fell below the 0.6100 figure on sentiment shifting sour, spurred by weaker-than-estimated China’s Caixin Manufacturing PMI, dropping towards “recessionary” territory. At the time of writing, the NZD/USD is trading at 0.6075.

Wall Street finished the Thursday session paring losses, with a late jump on US equities. Meanwhile, expectations that the US Federal Reserve will tighten 75 bps at September’s monetary policy meeting increased, with odds lying at a 92% chance, after solid US employment and ISM figures.

The US Department of Labor reported that Weekly Initial Jobless Claims for the last week, which ended on August 27, declined. Later, the Institute for Supply Management (ISM) revealed that August’s Manufacturing PMI was unchanged, at 52.3, higher than forecasts Worth noting that the Price Index sub-component decelerated from 60 to 52.5, signaling that elevated prices are getting down.

Elsewhere, the US Dollar Index, a gauge of the buck’s value, hit a 20-year high at 109.997 during the day, though at press time, it is up 0.91%, at 109.675.

The abovementioned factors were a headwind for the NZD/USD, which leaned on the dynamics of the greenback and market sentiment due to the lack of NZ economic data. Worth noting the major tested the YTD low reached on July 14, but buyers moved in, and recovered some ground.

What to watch

The New Zealand economic calendar will feature Terms of Trade, and Export Volumes, alongside Import/Export Prices. On the US front, the docket will reveal the US Nonfarm Payrolls report, alongside the Unemployment Rate and Factory Orders.

NZD/USD Key Technical Levels