NZD/USD: On a thin ice ahead of NZ employment data

• NZD/USD remains modestly unchanged as traders await quarterly employment data.
• The US-China trade war is taking its toll on Antipodeans, restricting their likely gains through the USD weakness.

Following a volatile day for Antipodeans, NZD/USD traders have all eyes set on the quarterly jobs report while changing hands around 0.6530 at the start of Tuesday’s Asian session.

China’s retaliation to the US trade tariffs grabbed the market’s attention by letting the off-shore Yuan weaken to a record low against the US Dollar (USD) and instructing domestic players to stop buying agricultural products from the world’s largest economy.

With this, the greenback had to bear the burden of its mistake but the resulting gains to commodity-linked currencies were off-set by the fears of a future trade war with their largest customer China, followed by a global economic slowdown.

It should also be noted that a weak print of the US ISM Non-Manufacturing data also weakened the greenback.

Investors will now keep an eye over New Zealand’s second quarter (Q2) jobs report that contains Employment Change, Unemployment Rate, Participation Rate and Labour Cost Index data. The headline Employment Change is likely to recover to +0.4% from -0.2% and so does the Participation Rate to 70.5% from 70.4%. However, the Unemployment Rate may rise to 4.3% from 4.2% with Labour Cost Index expected to have increased to 2.1% and 0.7% from 2.0% and 0.3% on a YoY and a QoQ basis respectively.

Following the employment numbers, Reserve Bank of New Zealand’s (RBNZ) Inflation expectations will also be the key to watch. The inflation forecast earlier marked 2.01% for the Q2 2019.

On the other hand, June month JOLTS Job Openings, 7.317M expected versus 7.323M prior, is the only number up for publishing.

While likely improvement in numbers can help the New Zealand Dollar (NZD) recover some of its latest losses, major moves will be confined ahead of the tomorrow’s RBNZ meeting which is largely expected to deliver a rate cut.

Technical Analysis

Failure to slip beneath ten-month-old ascending trend-line, coupled with oversold levels of 14-day relative strength index (RSI) highlights brighter chances for the pair pullback to July 10 low surrounding 0.6560. However, a downside break below 0.6500 round-figure after data, also comprising the trend-line, highlights May bottom close to 0.6480 and late-October 2018 low near 0.6465 for sellers.