NZD/USD remains stuck around 0.6440 on a steady NZ Unemployment Rate at 3.2%

• NZD/USD has faced barricades around 0.6440 on the flat jobless rate and Employment Change.
• This has bolstered the odds of a rate hike by the RBNZ.
• Fed’s policy is in the spotlight and a jumbo rate hike looks certain.

The NZD/USD pair has not displayed any firmer move as Statistics New Zealand has reported the Unemployment Rate at 3.2%. The jobless rate is in line with the market consensus and prior print of 3.2%. The NZ jobless rate at 3.2% signals the continuation of a tight labor market in the kiwi area, which signals a wage-price hike going forward. Also, the Employment Change has been printed at 0.1% similar to the market consensus and prior print of 0.1%.

This has improved the expectations of one more rate hike by the Reserve Bank of New Zealand (RBNZ) on May 25. The market participants should be aware of the fact that the RBNZ raised its interest rates by a hefty 50 basis points (bps) resulting in a 1.5% Official Cash Rate (OCR) in the second week of April.

Meanwhile, the US dollar index (DXY) is facing barricades at 103.50. The asset is displaying exhaustion ahead of the interest rate decision by the Federal Reserve (Fed). The DXY has witnessed a dream rally last month after surging around 4% on expectations of an aggressive hawkish tone from the Fed. Apart from the rate hikes, investors are also expecting the announcements of balance sheet reduction and hawkish guidance for the remaining year.

Although the Fed’s policy will remain in the spotlight, investors will also focus on the release of ISM Services PMI, which is seen at 58.5 against the prior print of 58.3.