NZD/USD refreshes day’s high around 0.6300 as DXY remains subdued, US NFP in focus

• NZD/USD has printed an intraday high at 0.6300 as DXY has turned sideways ahead of US NFP.
• Investors have ignored the weak NZ labor market data.
• Escalating US-China tensions could impact the antipodean significantly.

The NZD/USD pair is advancing sharply higher as investors have shrugged-off vulnerable employment data. The asset is likely to display a ‘Double Distribution’ trading session as a decent rally has been witnessed after an upside break of morning inventory distribution and further distribution is highly expected. The major has climbed to the round-level resistance of 0.6300.

On Wednesday, Stats NZ reported that the Unemployment Rate increased to 3.3% from the estimates of 3.1% and the prior release of 3.2% in the second quarter. Also, the Employment Change for the second quarter has landed at 0%, significantly lower than the estimates of 0.4% and the prior print of 0.1%.

The ineffectiveness of the kiwi economy in generating job opportunities has created immense trouble for the Reserve Bank of New Zealand (RBNZ). Price pressures are soaring in the NZ economy and the RBNZ was expecting decent performance from the labor market to get strengthened for hiking the Official Cash Rate (OCR) unhesitatingly. Now, crippled RBNZ would resort to a less-hawkish stance on the policy rates.

Soaring US-China tensions could fetch the risk-off impulse as death threats to US House Speaker Nancy Pelosi is not a weak concern. This may bring sanctions to China by the US and a slowdown in China could also impact the antipodean, being a trading partner to China.

Meanwhile, the US dollar index (DXY) is auctioning in a restricted territory as investors are awaiting the release of the US Nonfarm Payrolls (NFP). A preliminary estimate for the employment generation is 250k, lower than the prior release of 372k. Also, the jobless rate is expected to remain unchanged at 3.6%.