NZDUSD on Friday dropped -0.34% to 0.56556. Week ending 2025-02-07 rose 1.54%. What happened.

NZDUSD Analysis

Performance
Period	Pct	Chg	Momentum
Friday	-0.34%	-19.3 Pips
Week 2025-02-07	1.54%	86 Pips
February	0.34%	19.2 Pips

Upcoming key events for the new week (London Time)

Wed 01:30 PM CPI Inflation Rate (12-mth)
Wed 01:30 PM CPI Inflation Rate excluding Food and Energy sectors (12-mth)
Wed 03:00 PM Federal Reserve Chair Jerome Powell testifies
Thu 02:00 AM RBNZ Survey of Inflation Expectations (3-mth)
Thu 01:30 PM PPI excluding Food and Energy sectors (12-mth)
Fri 01:30 PM Monthly Retail Trade (1-mth)

What happened over the week

In the United States, the unemployment rate for January decreased to 4% compared to December’s 4.1%, indicating a slight improvement in the job market. Average Hourly Earnings saw a monthly increase of 0.5% in January from 0.3% in December, while a year-on-year comparison showed a rise from 3.9% to 4.1%. However, Nonfarm Payroll Employment saw a significant drop to 143,000 in January from 256,000 in December. The U-6 Total unemployment metric remained stable at 7.5% over the same period. Initial Unemployment Insurance Claims experienced an uptick to 219,000 for the week ending February 1st, rising from 208,000. Unit Labor Costs rose to 3% in Q4 from 0.8% in Q3, but Nonfarm Business Labor Productivity saw a decline from 2.2% to 1.2%. The Job Openings and Labor Turnover Survey (JOLTS) revealed job openings down to 7.6 million from 8.156 million in the previous month. New orders for manufactured goods declined by 0.9% in December, following a 0.4% decrease in November.

For New Zealand, the labor force participation rate declined slightly to 71% in Q4 from 71.2% in Q3. The unemployment rate rose to 5.1% in Q4 from 4.8% in Q3, showing a slight degradation in employment stability. The Labour Cost Index remained stable at 0.6% quarter on quarter. Employment Change showed minor improvement from -0.5% in Q3 to -0.1% in Q4. Building consents for new dwellings saw a significant drop of 5.6% in December after a 5.3% increase in November, indicating a slowdown in the construction sector.

The impact on the NZDUSD currency pair is quite nuanced. The general improvement in hourly earnings and static U-6 Total, despite lower payroll numbers in the U.S., could imply underlying wage inflation pressures, which may influence the Federal Reserve’s policy stance. The lowered U.S. unemployment rate suggests economic robustness that could strengthen the USD. Meanwhile, the increased unemployment rate in New Zealand puts pressure on the NZD, making it less appealing. Given the upcoming high-impact events, particularly Jerome Powell’s testimony, the RBNZ inflation survey, and the U.S. inflation rate and retail trade data, the NZDUSD could experience heightened volatility. Traders may anticipate more USD strength, particularly if these events suggest a hawkish Fed outlook. With mixed employment data in the U.S. and weakening indicators in New Zealand, the NZDUSD may face downward pressure in the short term but could remain volatile as new data emerges.

From X (Twitter)

Latest release: Unemployment rate at 5.1 percent in the December 2024 quarter.https://t.co/unvSqNiTWI pic.twitter.com/NHYTOq3rHo

— Stats NZ (@Stats_NZ) February 4, 2025

What can we expect from NZDUSD for the new week and what happened on Friday?

NZDUSD on Friday dropped -0.34% to 0.57. Price is below 9-Day EMA while Stochastic is falling in overbought zone. For the week ending 2025-02-07, the pair rose 1.54% or 86 pips higher.

Looking ahead, NZDUSD looks mixed as the pair is likely to consolidate above week low of 0.56.

For the new week, our technical outlook is mixed. To see upside interest, we prefer to look at price breakout of week high of 0.57 or at least consolidates above Weekly Pivot level of 0.56. On the downside, we are looking at week low 0.56 or 0.56 (WS1) as immediate support level. NZDUSD need to break on either side to indicate a short-term bias. A break above 0.57 would suggest bullish bias after recent positive movement.

For the month of February, NZDUSD is up by 0.34% or 19.2 pips higher.

Weekly key levels to watch out:

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