NZD/USD sticks to modest gains around 0.5900, over two-week high ahead of NFP

• NZD/USD scales higher for the third successive day amid the prevalent USD selling bias.
• Bets that the Fed will not hike rates again and a positive risk tone undermine the USD.
• Spot prices remain on track to snap a three-week losing streak ahead of the NFP report.

The NZD/USD pair attracts some buying for the third successive day on Friday and climbs back above the 0.5900 mark during the first half of the European session. Spot prices currently trade just a few pips below a two-week high touched on Thursday and now look to the US monthly employment details for a fresh impetus.

The popularly known NFP report is due for release later during the early North American session and should provide fresh cues about the Federal Reserve's (Fed) next policy move. This, in turn, will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the NZD/USD pair.

Heading into the key data risk, expectations that the Fed is nearing the end of its policy tightening campaign continue to drag the US Treasury bond yields lower. This, along with the upbeat market mood – as depicted by a generally positive tone around the equity markets – undermines the USD and acts as a tailwind for the NZD/USD pair.

Meanwhile, a private-sector survey showed that business activity in China's services sector expanded at a slightly faster pace in October and turns out to be another factor benefitting antipodean currencies, including the New Zealand Dollar (NZD). This, however, does little to ease market worries about a slowdown in the world's second-largest economy.

Apart from this, growing acceptance that the Reserve Bank of New Zealand (RBNZ) will keep its policy rate unchanged in November, bolstered by weak domestic employment figures earlier this week, might cap the NZD/USD pair. This, in turn, warrants caution before placing fresh bullish bets and positioning for any further appreciating move.

Hence, strong follow-through buying is needed to confirm that the NZD/USD pair has formed a near-term bottom. Nevertheless, spot prices remain on track to register strong weekly gains and snap a three-week losing streak to the lowest level since November 2022, around the 0.5775-0.5770 region touched last Thursday.

Technical levels to watch