NZD/USD attempts a rebound above 0.6150, risk-off impulse is still active

• NZD/USD has witnessed an attempt of recovery after dropping to near 0.6160.
• More downside in the kiwi asset is still favored as the risk-off impulse is still solid.
• This week, Fed Powell’s speech and US ADP Employment data will be of utmost importance.

The NZD/USD pair has sensed some bids after a vertical drop to near 0.6160 in the late New York session. The kiwi asset witnessed intense selling pressure on Monday after surrendering the round-level support of 0.6200. An attempt of a recovery near 0.6160 should not be considered a reversal yet as the market mood is still cautious and a cushion is yet to be finalized.

The US Dollar Index (DXY) has extended its gains to near 106.67 after a V-shape recovery from a low of 105.40. Rising protests against the Covid-19 lockdown in China have posed a significant impact on commodity-linked currencies, being their major trading partners. Therefore, the decline in antipodeans is higher in comparison with gains recorded in the USD Index.

S&P500 has experienced significant losses, portraying a sour market mood. Meanwhile, the returns on US Treasury bonds are still subdued ahead of a speech from Federal Reserve (Fed) chair Jerome Powell. The 10-year US Treasury yields are still below 3.70% after a mild recovery. It seems that anxiety ahead of Fed Powell’s speech has sidelined them.

Apart from Fed Powell’s speech, investors are keeping an eye on the United States Automatic Data Processing (ADP) Employment data. As per the estimates, the US economy has created additional 200k jobs in November vs. the prior release of 239k. The job creation numbers are declining in the past few months as higher interest rates and weaker economic projections have forced firms to use their current manpower in the best manner and postponement of the recruitment process.