NZD/USD stays around 0.7100 despite strong New Zealand Q3 Employment data

• NZD/USD consolidates the heaviest daily fall in five weeks.
• New Zealand Unemployment Rate dropped to 3.4%, Employment Change rose 2.0% in Q3.
• Pre-Fed sentiment may offer dull markets but US ADP, ISM Services PMI can offer intermediate moves.

NZD/USD pays a little heed to the strong Q3 New Zealand (NZ) jobs data, licking wounds near a two-week low surrounding 0.7100. That said, the kiwi pair dropped the most in five weeks the previous day before the bears took a breather during the early Wednesday morning in Asia.

That said, NZ Q3 Employment Change provided a strong beat to the 0.4% expected and 1.0% prior with the 2.0% figures while the Unemployment Chang also dropped heavily past 4.0% previous readouts and 3.9% market consensus to 3.4% during the stated period.

Read: New Zealand Unemployment beats forecasts, NZD firms

Earlier in the day, the Reserve Bank of New Zealand’s bi-annual Financial Stability Review (FSR)  report said, “We expect banks to be more cautious about high debt-to-income loans given the risks of rising interest rates and the economic outlook.”

It’s worth mentioning that New Zealand’s fortnightly release of the GDT Price Index jumped 4.3% versus 2.2% prior.

The Kiwi pair’s refrain from reacting to the upbeat fundamentals at home could be linked to the RBNZ’s already announced rate hike and the Reserve Bank of Australia’s (RBA) firm commitment to hold the benchmark rates unchanged before 2024, as announced the previous day. On the same line could be the market’s wait for the US Federal Reserve’s (Fed) monetary policy announcement amid tapering tantrums. Furthermore, China’s appeal to local governments to help families store enough foods for this winter pushed the traders towards skepticism and weighed on the NZD/USD prices. Alternatively, firmer equities and hopes of US stimulus restrict immediate declines of the Kiwi pair, not to forget upbeat fundamentals at home.

Amid these plays, the Wall Street benchmarks closed positive with the DJI 30 and S&P 500 refreshing record top while the US 10-year Treasury yields dropped to 1.55%.

Looking forward, the pre-Fed trading lull could challenge the NZD/USD moves but monthly releases of the US ADP Employment Change and ISM Services PMI may entertain intraday traders. Should the Fed announce a higher-than-expected $15 billion per month tapering, the Kiwi pair has further south to trace.

Read: Fed Interest Rate Decision Preview: Inflation, employment and interest rates

Technical analysis

NZD/USD not only broke a two-week-old trading range but also slipped below 61.8% Fibonacci retracement (Fibo.) of May-August downside, around 0.7120, which in turn suggests further downside by the pair. However, the 200-DMA level near 0.7100 becomes a tough nut to crack for the bears before targeting August month’s high and 50% Fibonacci retracement, respectively around 0.7090 and 0.7060. Alternatively, the 61.8% Fibo. level near 0.7120 will precede the lower end of the stated range, close to 0.7130, will probe the NZD/USD pair’s short-term rebound. Following that, September’s high of 0.7171 could lure the bulls.