-
US headline CPI higher than expected.
-
US jobless claims remain low.
-
New Zealand Manufacturing Index declines.
The New Zealand dollar is lower on Friday after a massive plunge a day earlier. In the European session, NZD/USD is trading at 0.5911, down 0.25%.
The US inflation report was stronger than expected, and the US dollar responded with sharp gains against the major currencies. Risk currencies were hit hard, and the New Zealand dollar plunged 1.56%, its worst one-day performance since May.
US inflation and employment reports on Thursday indicated that the economy remains resilient, despite elevated interest rates. US CPI was unchanged in September at 3.7% y/y, higher than the market estimate of 3.6% y/y. Core CPI fell from 4.3% to 4.1% y/y, matching the estimate. Although the core rate is a better gauge of inflation, investors focused on the headline reading, which raised concerns that the Fed will continue its “higher for longer” stance.
US unemployment claims pointed to a resilient labor market that has cracks but refuses to break. For the week ending October 7th, unemployment claims were unchanged at 209,000, below the estimate of 210,000. This is further evidence that the labour market remains very tight and provides further support for the Fed to remain hawkish and possibly raise rates before the end of the year.
The markets are leaning towards the Fed holding rates for the rest of the year but haven’t ruled out one more hike. The probability of a hike before the end of the year jumped to 38% after the inflation report but has fallen to 30%, according to the CME FedWatch Tool.
In New Zealand, the manufacturing sector can’t find its footing. The Business NZ Manufacturing Index contracted to 45.3 in September, down from 46.1 in September. This was a seventh straight decline and was the lowest reading since August 2021. A reading below the 50 level indicates contraction.
NZD/USD technical
-
NZD/USD is testing support at 0.5956. The next support level is 0.5905.
-
There is resistance at 0.6042 and 0.6093.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD stabilizes near 1.0500, looks to post weekly losses
EUR/USD extended its daily decline toward 1.0500 in the second half of the American session, pressured by the souring market mood. Despite the bullish action seen earlier in the week, the pair remains on track to register weekly losses.
GBP/USD falls below 1.2150 as USD rebounds
Following an earlier recovery attempt, GBP/USD turned south and declined below 1.2100 in the second half of the day on Friday. The negative shift seen in risk mood amid rising geopolitical tensions helps the US Dollar outperform its rivals and hurts the pair.
Gold advances to fresh multi-week highs above $1,920
Gold extended its daily rally and climbed above $1,920 for the first time in over two weeks on Friday. Escalating geopolitical tensions ahead of the weekend weigh on T-bond yields and provide a boost to XAU/USD, which remains on track to gain nearly 5% this week.
Bitcoin could be an alternative to US-listed companies but not in the short term
Bitcoin has dipped below $27,000, adding to the subdued cryptocurrency market sentiment. While short-term price concerns persist, analysts predict a rebound based on historical figures.
Nvidia Stock Forecast: NVDA slips as Biden administration attempts to close AI chip loophole
Nvida's stock price opened marginally lower on Friday after Reuters reported that the Biden administration is attempting to close a loophole that allowed Chinese companies access to state-of-the-art computer chips used for AI.