NZD/USD refreshes day’s high above 0.6220 on upbeat Employment data, Fed policy eyed

• NZD/USD has printed a fresh day’s high of 0.6222 on solid NZ Employment data.
• NZ Employment Change has jumped to 0.8% while the jobless rate remains steady at 3.4% vs. the consensus of 3.5%.
• The Fed is expected to announce an interest rate hike by 25 bps to continue to maintain pressure on stubborn US inflation.

The NZD/USD pair has scaled above the critical resistance of 0.6220 as Statz NZ has reported better-than-projected Employment data (Q1). The Employment Change has landed at 0.8% higher than the consensus of 0.4% and the former release of 0.2%. While the Unemployment Rate has remained steady at 3.4% as reported in the previous quarter but lower than the estimates of 3.5%.

Apart from them, quarterly Labor Cost Index data accelerated at a pace of 0.8% lower vs. the estimates and the prior release of 1.1%. The annual Employment Cost Index has landed lower at 4.5% from the expectations of 4.6% but higher than the former release of 4.3%.

A continuation of a tight labor market may force the Reserve Bank of New Zealand (RBNZ) to remain hawkish ahead as consumer spending could remain resilient due to higher employment.

Investors should note that RBNZ Governor Adrian Orr pushed its Official Cash Rate (OCR) higher surprisingly by 50 basis points (bps) to 5.25% in April to strengthen its defense against persistent inflation.

Later this week, Caixin Manufacturing PMI (April) data will be keenly watched. The economic data is expected to land at 50.3 lower than the former figure of 50.0.

On the US Dollar front, a power-pack action is expected amid the release of the monetary policy by the Federal Reserve (Fed). The Fed is expected to announce an interest rate hike by 25 basis points (bps) to continue to maintain pressure on stubborn United States inflation.

In addition to the Fed policy, US ISM Services PMI (April) data will be keenly watched. As per the consensus, ISM Services PMI (April) is seen higher at 53.1 from the former release of 51.2. Also, New Orders Index is expected to jump to 57.0 vs. the prior release of 52.2.