NZD/USD remains on the defensive above 0.5900 ahead of the RBNZ rate decision
|- NZD/USD extends its downside above 0.5900 amid the cautious mood and USD demand.
- US JOLTS Job Openings came in above expectations.
- The Reserve Bank of New Zealand (RBNZ) is likely to hold the rate unchanged at 5.50% at its October meeting.
- Traders await the RBNZ rate decision on Wednesday.
The NZD/USD pair remains on the defensive above the 0.5900 area during the early Asian session on Wednesday. Markets turn cautious ahead of the Reserve Bank of New Zealand (RBNZ) monetary policy meeting, with no change expected. The pair currently trades around 0.5906, losing 0.03% on the day.
The US Bureau of Labor Statistics (BLS) revealed in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday that the number of job openings for August stood at 9.6 million from 8.9 million (revised from 8.8 million) in the previous month. The figure came in better than the expectation of 8.8 million by a wide margin. Following the upbeat data, the US Dollar (USD) surged above 107.34 while US Treasury yields traded higher. The 10-year yield reached 4.80%, the highest since 2007.
On Tuesday, Cleveland Federal Reserve President Loretta Mester stated that she is likely to favor an interest rate hike at the next meeting if the current economic situation holds while mentioning that the Fed is likely at or near peak for interest rate target. Meanwhile, Atlanta Fed President Raphael Bostic said he will be patient and there is an urgency for us to do anything more. That said, the better-than-expected US economic data, higher yield, and cautious mood in the market lift the Greenback against its rivals and act as a headwind for the NZD/USD pair.
On the Kiwi front, RBNZ is likely to maintain the key interest rate unchanged at 5.50% for the fourth straight time on Wednesday. According to the interest rate market, the probability of a rate hike in October is approximately 10% and rises to over 50% for the meeting in November. However, the hawkish comments from the statement might limit the New Zealand Dollar's (NZD) downside.
Market participants will closely watch the Reserve Bank of New Zealand (RBNZ) Interest Rate Decision on Wednesday. Later on the day, the attention will shift to the US ADP Employment Change and ISM Services PMI. On Friday, the highly-anticipated US Nonfarm Payrolls will be released.
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