New Zealand dollar may rise against USD and AUD after job numbers impress

Wednesday’s Asia-Pacific outlook

Asia-Pacific markets face a mixed open after US stocks surrendered early gains before ending the day in the red. A circulating social media post caused rumors that China would soon adjust its “Zero-Covid” policy, which sent Chinese stocks sharply higher on Tuesday.

Hong Kong’s Hang Seng Index (HSI) finished 5.23% higher, while China’s tech-heavy CSI-300 rose 3.58%.

US labor market data, released Tuesday morning, showed an unexpected uptick in the number of job openings. The FOMC is expected to increase rates by 75 basis points tomorrow, according to Fed funds futures. Traders will parse Federal Reserve Chair Jerome Powell’s language in tomorrow’s press conference. A hint that the pace of tightening should slow may send stocks higher in a relief rally.

The Australian dollar was little changed after the Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points on Tuesday. While its inflation target for 2022 increased to 8% from 7.75%, a sharp price drop remains the base case scenario in 2023, although rates are seen ending above 3% in 2024. Australia’s ASX 200 finished 1.65% higher. Australian home loans and building permits data for September is due today, as well as the RBA’s chart pack.

New Zealand’s third-quarter jobs data impressed to the upside this morning, with employment rising 1.3% from the quarter before and beating the 0.5% consensus forecast. The participation rate rose from 70.8% to 71.7%, while the unemployment rate held at 3.3%. RBNZ rate hike bets increased modestly following the jobs data, with overnight index swaps showing an 80.2% chance for a 75-bps hike later this month. AUD/NZD fell more than 0.5% overnight, pushing prices near the May low.

Notable economic events for November 02:

• South Korea – Inflation Rate YoY (OCT)
• South Korea – CPI (OCT)
• Bank of Japan – Monetary Policy Meeting Minutes

New Zealand dollar technical outlook

NZD/USD’s upside since putting in the October low has slowed over the last week. That formed a Cup and Handle pattern. A breakout higher may be near. Prices would first have to pierce above the 50-day Simple Moving Average (SMA) and handle resistance to confirm the pattern. The measured move puts the upside target around the 0.6099 level.

NZD/USD – daily chart

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