Nzdusd declines as US economic indicators signal potential interest rate hikes

NZDUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.46%	-27.3 Pips
Week to-date	-2.03%	-121.3 Pips
November	-2.12%	-126.5 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD Monthly Retail Trade (1-mth)

What happened lately

In the United States, the Producer Price Index (PPI) experienced significant shifts in October. The PPI increased by 0.2% from its previous position in September, as reported by the Bureau of Labor Statistics. Over a twelve-month period, the PPI rose by 2.4%, marking an increase from a revised 1.9%. Excluding the volatile food and energy sectors, this index rose to 3.1% from 2.9%, while the monthly figure went up by 0.3% compared to September’s 0.2%. Concurrently, the Consumer Price Index (CPI) showed more measured changes. The monthly CPI remained flat at 0.2% in October, with the annual CPI reaching 2.6%, an increase from the previous month’s 2.4%. The CPI excluding food and energy sectors presented no change, standing at 0.3% month-over-month and remaining constant at 3.3% over a year. Meanwhile, the U.S. labor market indicated strength as initial unemployment claims decreased to 217,000 in the week ending November 9th, dropping from 221,000 according to the Department of Labor.

The recent U.S. economic indicators suggest a firming inflationary environment with robust labor market conditions, both of which could exert upward pressure on interest rates as policymakers might opt to counteract inflationary trends. Such economic signals generally strengthen the USD, potentially contributing to the recent downturn in the NZDUSD pair, which fell by 0.46% to 0.58450 on Thursday. The prospect of higher U.S. interest rates makes USD-denominated assets more attractive, thereby increasing demand for the currency and putting downward pressure on opposite pairs like NZDUSD. The attention now shifts to the upcoming US Monthly Retail Trade data, scheduled for release and considered a high-impact event, as it may further influence currency dynamics and investor sentiment in the foreign exchange market.

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What can we expect from NZDUSD today?

NZDUSD on Thursday dropped -0.46% to 0.58450. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for NZDUSD looks bearish as the pair posted lower in Thursday trading session.

Looking ahead for the day, immediate support level is at S1 0.58279 with break below could see further selling pressure towards S2 at 0.58107. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.58840 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.58388 would indicate selling pressure.

For the week to-date, take note that NZDUSD is bearish as the pair posted lower by -2.03%.

Key levels to watch out:

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