NZD/USD stumbles and prints a two-day low around 0.6210s on broad US Dollar strength

• NZD/USD dropped below the 200-day EMA, extending its losses courtesy of solid US data.
• Kansas City Fed President Esther George estimates rates to be around 5% in 2023 and 2024,
• Friday’s US Nonfarm Payrolls are estimated to fall to 200K.

The New Zealand Dollar (NZD) lost traction against the US Dollar (USD) courtesy of solid US data sparking further action by the Federal Reserve. Wall Street ended the session with losses, portraying a dampened market mood. At the time of writing, the NZD/USD is trading at 0.6223 after hitting a daily high of 0.6309.

The NZD/USD pair could not capitalize on early US Dollar weakness on Wednesday and was dragged lower after solid labor data was released. As reported by ADP, private hiring in December crushed estimates of 150K, jumping by 234K. Meanwhile, unemployment claims edged lower to 204K beneath 225K forecasts, reinforcing the workforce’s strength, suggesting further Fed tightening is needed.

Aside from this, Fed speakers like Esther George, Raphael Bostic, and James Bullard reiterated that inflation is too high and that rates must surpass the 5% threshold. Kansas City Fed President George said rates need to be around 5% until 2024. Bullard added the economy remains strong and acknowledged a resilient labor market that justifies Fed’s aggression.

Elsewhere, the US Dollar Index, which tracks the greenback’s performance against a basket of peers, printed a two-month high at 105.272, though at the time of typing, it clings to gains of 0.83% above the 105.000 figure. US Treasury bond yields bull flattened, with the 10-year benchmark note rate holding to 1% gains at 3.722%.

What’s next for the NZD/USD?

An absent New Zealand (NZ) economic docket would leave traders adrift to the dynamics of the United States (US) economy. On the US front, Nonfarm Payrolls for December are expected to edge low, estimated at 200K beneath the prior 263K, while the Unemployment Rate is foreseen at 3.7%, unchanged.

NZD/USD Key Technical Levels