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NZD/USD rises as weaker US jobs data dents USD outlook
New Zealand dollar gains were supported by a Reserve Bank of New Zealand hawkish stance, while CME FedWatch showed September hike odds falling to 42% from 55% earlier.
NZD/USD was trading around 0.5890, up 0.36% on the day, as the New Zealand dollar strengthened while the US dollar slid after a weaker-than-expected US employment report, FXStreet reported.
According to data released by the Bureau of Labor Statistics, US nonfarm payrolls fell by 23K in July versus expectations for an increase of 80K, and prior months were revised lower, including June payrolls revised down from 57K to 20K and May from 129K to 63K. The unemployment rate edged down to 4.1% from 4.2%, and annual average hourly earnings growth slowed to 3.2% from a revised 3.4%, reinforcing signs of cooling in the labor market.
The pullback in the USD also reflected reduced expectations for further Federal Reserve tightening, with CME FedWatch indicating the probability of a 25-basis-point rate hike in September fell to 42%, down from 55% a day earlier and 67% a week earlier. FXStreet also noted comments from Richmond Fed President Thomas Barkin, who characterized the employment data as reflecting low hiring and low firing rather than a major deterioration, and said corporate earnings remain strong.
FXStreet added that New York Fed consumer expectations showed one-year inflation easing to 3.6% in July from 3.7% in June, while three-year and five-year expectations were unchanged, supporting the view that inflation pressures are moderating. On the Kiwi side, the pair received additional support from the Reserve Bank of New Zealand’s hawkish bias, and the article cited technical levels near 0.5884 as support.