NZD/USD extends its upside above the mid-0.6100s, US NFP data eyed

• NZD/USD gains ground near 0.6175 in Friday’s early Asian session. 
• US weekly Initial Jobless Claims last week came in at 217K, worse than expected. 
• RBNZ’s Conway said it might cut interest rates sooner than expected if the Fed begins easing later this year.
• The US February Nonfarm Payrolls (NFP) will be in the spotlight on Friday. 

The NZD/USD pair gains momentum above the mid-0.6100s during the early Asian session on Friday. The uptick of the pair is supported by the sell-off of the US Dollar Index (DXY) below the 103.00 mark for the first time since early February. Investors will closely monitor the highly-anticipated US Nonfarm Payrolls (NFP) due on Friday. This event could trigger volatility in the market. At press time, NZD/USD is trading at 0.6175, up 0.01% on the day.

On Thursday, the US weekly Initial Jobless Claims for the week ended March 2 held at a seasonally adjusted 217,000, worse than the market expectation of 215,000 in the previous week. Meanwhile,  Continuing Claims rose by 8,000 to 1.906M in the week ended February 24 from 1.899M prior. 

The strong labor market and hot inflation data since the beginning of the year have lowered the likelihood that the Federal Reserve (Fed) will lower interest rates in May. Fed Chair Jerome Powell said to the Senate Banking Committee on Wednesday that he thought the interest rate in the US had reached its peak and would be cut later this year.

The Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged at 5.5% at its February meeting and stated that it will keep monetary conditions tight in the near term to further bring down inflation. RBNZ Chief Economist Conway said on Wednesday that the Fed rate cuts could drive up the New Zealand Dollar (NZD) and reduce inflationary pressure. Conway added that the RBNZ might cut interest rates sooner than expected if the Fed begins easing later this year.

Looking ahead, the US February labor market report will be due on Friday, including Nonfarm-Payrolls, Unemployment Rate, and Average Hourly Earnings. The NFP figure is estimated to see 200,000 jobs added to the US economy, while the unemployment rate is expected to hold steady at 3.7%.