The New Zealand regained ground against its U.S. counterpart on Friday, as weaker than expected U.S. employment data forced investors to recalibrate their assumptions about the future course of the Federal Reserve’s monetary policy. The New Zealand dollar suffered major loss against the greenback in the early week but made quick recovery after the release of the U.S employment statistics.
The Labor Department reported Friday that the U.S. economy added 192,000 jobs in March, below expectations for jobs growth of 200,000. February’s figure was revised up to 197,000 from a previously reported 175,000. The U.S. unemployment rate also remained unchanged at 6.7%, compared to expectations for a tick down to 6.6%. This reports currently weakened the greenback against the commodity currencies at the end of Friday’s trading session.
The New Zealand dollar has been well-supported in recent weeks as the Reserve Bank of New Zealand with the currency having the highest interest rate. The RBNZ also began to tighten monetary policy, while growing expectations for monetary stimulus in China, a key export market for New Zealand, also benefitted the kiwi.
The pair is likely to find support at 0.8513 as weekly bias remains on the upside with price forming an engulfing rejection pattern on the EMA’s. Demand to 0.86996 (its highest level since August 2011) is expected in this week and a break of this resistance might resume the current bullish trend to 0.88453 resistance (July 31, 2011 high).
In the week ahead, market players will be focusing on Wednesday’s minutes of the Fed’s most recent policy setting meeting for further clues on the future course of monetary policy.