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• The NZD/USD pair continued slipping ahead of New Zealand’s jobs numbers.
• The US dollar index (DXY) continued rising after bottoming in July.
• The US will publish the latest non-farm payrolls (NFP) data.

The NZD/USD exchange rate has drifted downwards as the US dollar index (DXY) strength continued. The kiwi retreated to a low of 0.6138, the lowest level since Friday as the focus shifts to the upcoming New Zealand jobs data.
 

New Zealand jobs data

The most important NZD news of the week will be the upcoming jobs numbers scheduled for Wednesday. Economists polled by Reuters believe that the employment change rose by 0.5% in the second quarter after rising by 0.8% in Q1.

The median estimate is that the unemployment rate rose slightly from 3.4% in Q1 to 3.5%. Despite the increase, the country’s labor market remains extremely tight, with many companies struggling to find workers.

Further, economists expect that the labor cost index rose from 0.9% in Q1 to 1.2% in Q2, which will translate to an annual increase of 4.4%. While higher wages are always welcome, they tend to have a negative impact on inflation.

These numbers will come a few days ahead of the upcoming interest rate decision by the Reserve Bank of New Zealand (RBNZ). In its most recent decision, the bank decided to pause its rate hikes at 5.50%. 

The bank cited the fact that New Zealand’s economy was slowing even as inflation remained stubbornly high. The most recent data showed that New Zealand’s economy is now in a recession as the GDP contracted for two straight quarters. As such, further hikes will likely make the situation worse.

The NZD/USD pair will also react to the upcoming American jobs numbers. Economists expect the data to show that the economy added over 180k jobs in July after it added 540k in June. The report will come two days before the official non-farm payrolls (NFP) data. 
 

NZ/USD technical analysis

(Click on image to enlarge)

NZDUSD chart by TradingView

The four-hour chart shows that the NZD to USD exchange rate continued retreating as the DXY index upward trend intensified. The pair has moved below the 61.8% Fibonacci Retracement point. It has dropped below the 25-day and 50-day exponential moving averages (EMA).

The pair is hovering slightly above the key support at 0.6120, the lowest point on July 28th. At the same time, the Relative Strength Index (RSI) and the MACD drifted downwards. Therefore, the pair will likely continue falling as traders target the next key support level at 0.6100. This view will be confirmed if the pair drops below the support at 0.6120.

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