NZD/USD: making a correction towards the 0.69 handle, best of a bad bunch in commodity currencies

Currently, NZD/USD is trading at 0.6870, up 0.01% on the day, having posted a daily high at 0.6875 and low at 0.6866.

Overnight, NZD/USD was making a minor recovery within the steep downside channel from 2md May's sell-off at 0.6966. The kiwi picked itself up from 0.6838 and is regarded as having one of the more enviable qualities within the commodity block. The metals were a drag on the Aussie and WTI was the nail in the coffin for the CAD, but New Zealand dollar's credentials give it the upper hand at the moment. 

Just this week, the NZ unemployment rate fell to 4.9% in the March quarter, a big beat vrs the market's expectation of 5.1% and the previous reading of 5.2%. Also, the participation rate was higher, 70.6% versus 70.5%, which makes the unemployment rate drop even more impressive. Also, the report came with solid growth in employment +5.7% y/y versus 5.3% expected. This report opens questions as to whether the RBNZ might be in a position in the future to turn towards the hawkish side, although wages were subdued and average hourly earnings rose only 0.3% q/q vrs 0.7% median consensus and until this improves, the RBNZ should be expected to hold out. 

For the day ahead, analysts at ANZ noted that there will be the results of the RBNZ’s Q2 Inflation Expectations survey, RBA minutes but explained that "the biggie tonight is US non-farm payrolls (out at 12.30am)...The consensus expects a +190k gain/4.6% unemployment."

Then, for the weekend, markets await the French election run-off results were Macron has ben fully priced in.

NZD/USD levels

A break of 0.6890 opens 0.6920 ahead of the and psychological 0.70 level. The 17th April highs of 0.7035 are then in focus. 0.7060/70 come thereafter as a key resistance area through the 200-d ema (0.7055). There is a double bottom at 0.7130 as the mid-Feb lows.  To the downside, NZD/USD has the 0.6850/60 as the low for today ahead of 0.6838 overnight range low as a key support. Next key support below 0.6700 is down to 0.6675 as the 29th May 2016 high.

 Macron vs Le Pen: How to trade the French elections with Joseph Trevisani and Yann Quelenn