The NZD/USD pair gained momentum during Thursday’s Asian session, rising to around 0.5880, as the US Dollar weakened following disappointing labor market data.
Key Data: US Job Openings Fall Short
US JOLTS Job Openings data released on Wednesday showed a decline to 7.18 million in July, missing expectations of 7.4 million. This marks a decrease from June’s revised 7.36 million. The data further supports market speculation that the Federal Reserve may ease monetary policy, putting downward pressure on the US Dollar. As a result, investors are pricing in a 97.5% chance of a 25 basis point rate cut at the Fed’s September meeting, up from 91% before the report.
RBNZ’s Dovish Outlook May Limit NZD Gains
Despite the positive reaction from NZD/USD, the Reserve Bank of New Zealand’s (RBNZ) dovish stance might limit the pair’s upside. The RBNZ has been actively cutting rates since August 2024 to support a fragile recovery following aggressive tightening in previous years. Their updated forecast suggests the Official Cash Rate (OCR) could drop to around 2.5% by early 2026, with at least two more rate cuts expected. This dovish outlook could weigh on the New Zealand Dollar in the near term.
Market Focus: US Job Data and Economic Indicators Ahead
With the US labor market in focus, traders will be eyeing the upcoming US Initial Jobless Claims, ADP Employment Change, and ISM Services PMI, which could provide further clues on the Fed’s policy direction.
For now, NZD/USD remains supported by the US Dollar’s weakness, but further upward movement could be capped by the RBNZ’s cautious approach.
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