NZD/USD: Bulls attack 0.7050 on strong NZ Q2 Employment data

• NZD/USD remains on the front foot on upbeat employment data from home.
• New Zealand Q2 jobs report amplified concerns over RBNZ rate hike in 2021.
• Market sentiment dwindles amid fresh geopolitical woes, mixed covid and stimulus headlines.
• Aussie-China data, risk catalysts can offer immediate direction ahead of the key US ADP and ISM PMI figures.

NZD/USD holds on to the weekly gains while taking the bids around 0.7035, 0.26% intraday, during early Wednesday morning in Asia. The kiwi pair recently gained on firmer second quarter (Q2) employment report from New Zealand (NZ).

NZ Employment Change rose past 0.7% market consensus and 0.6% previous readouts to 1.0% whereas the Unemployment Rate slumped below 4.5% forecast and 4.7% prior to 4.0%.

Read: NZ jobs data beats expectatons, NZD/USD marginally higher

Other than the positive data, the Reserve Bank of Australia’s (RBA) readiness to keep the September tapering on the table despite covid woes at home also backs the odds of the Reserve Bank of New Zealand’s (RBNZ) rate hike in 2021.

Recently easy covid numbers from Australia and the UK, versus a spike in the US infections, joins the RBNZ’s steps to curb the lending for homes while offering additional motivation to the NZD/USD bulls.

On the contrary, fresh geopolitical tussles between the West and Iran, as well as with China, test the pair buyers. Additionally, uncertainty over US President Joe Biden’s infrastructure spending bill passage in the Senate and cautious sentiment ahead of the key data/events of the week also probe the pair’s upside momentum.

It’s worth noting that a -0.10% print of the S&P 500 Futures, despite Wall Street’s upbeat performance, also challenges the NZD/USD bulls.

Having witnessed the initial reaction to the NZ data, the pair traders should keep their eyes on the Australian Retail Sales for June and China’s Caixin Services PMI for July for further direction. However, major attention will be given to the risk catalysts and the US data. Among them, ADP Employment Change  for July, an early signal for Friday’s US Nonfarm Payrolls (NFP), as well as ISM Services PMI will be the key to follow.

Technical analysis

NZD/USD battles 200-day EMA around 0.7020 ahead of confronting a downward sloping trend line from June 15, near 0.7030. Even if the bulls manage to cross the 0.7030 hurdle, a confluence of 100-day and 200-day SMA, near 0.7100 will be the key to watch. On the contrary, failures to stay beyond 0.7000 may recall the bears targeting the 0.6920 horizontal support.