NZD/USD bulls in charge as US Dollar suffers early blows to the stomach
- NZD/USD is firming into the 0.6070s in early Asia ahead of the RBA.
- US Dollar fell on Monday on a poor data outcome.
NZD/USD is trading away from the lows of Monday after a parabolic rally that occurred in the New York session. NZD/USD is starting the day in the 0.6070s as traders await the Reserve Bank of Australia´s meeting.
NZD/USD rallied on the back of a drop in the US Dollar after the weaker ISM services print. ´´The May ISM Services index fell 1.6pts to 50.3, below consensus of a lift to 52.4. That is the survey’s lowest reading since the initial onset of the pandemic, except for December last year which was affected by severe weather conditions,´´ analysts at ANZ Bank explained. ´´The print will undoubtedly fan expectations that the largest sector of economic activity may finally be responding to Fed tightening.´´
As for the US Dollar, the index cut early gains to trade little changed around 104 on Monday. The data dented the US Dollar that had otherwise enjoyed the Nonfarm Payrolls and a remarkable 339K jobs in May. However, the Unemployment Rate rose by 0.3 percentage points to 3.7% and hourly wage growth slowed. Around 80% of market participants expect the Fed to leave rates steady when it meets next week.
Additionally, the analysts at ANZ Bank also explained that a rate hike from the RBA today is a risk, and they think´´ the RBNZ will deliver two more hikes by August, so expect volatility given the market is hedging its bets 50/50 each way.´´