Forex News
- NZD/USD trades with mild gains near 0.5855 in Thursday’s early European session.
- Financial markets raise their bets that the Fed will increase interest rates in September following Warsh’s speech.
- Further consolidation cannot be ruled out, with bearish RSI momentum.
- The first upside target is seen in the 0.5900-0.5910 region; the initial support level to watch is 0.5845.
The NZD/USD pair posts modest gains around 0.5855 during the early European trading hours on Thursday, supported by stronger-than-expected Chinese economic data. Attention will shift to the US August employment data, which will be released later on Friday.
China’s services activity expanded at a faster pace in August, with the Services Purchasing Managers' Index (PMI) rising to 51.4 from 50.4 in July, RatingDog showed on Thursday. This figure came in above the market consensus of 50.6. This report provides some support to the China-proxy Kiwi, as China is a major trading partner of New Zealand.
On the other hand, Federal Reserve (Fed) Chair Kevin Warsh’s speech at the Jackson Hole symposium has bolstered expectations of a rate hike in September. Warsh said last week that recent inflation data had been moderate, but this was not enough to consider underlying inflation trends to have improved substantially. Warsh further stated that the Fed must be confident that inflation is moving toward the target level clearly and quickly enough.
His hawkish comments could underpin the Greenback and act as a headwind for the pair. The probability of a Fed rate hike in September rose to 66.1% after Warsh’s speech, according to CME Group FedWatch tool.
RBNZ lifts rates as Commerzbank highlights gradual withdrawal of stimulus
According to analysts at Commerzbank, the Reserve Bank of New Zealand has raised the Overnight Cash Rate (OCR) by 25bp to 2.75% “as expected,” with policymakers judging that “a gradual removal of monetary stimulus was appropriate to return inflation sustainably to the target.” The bank notes that the move underscores the RBNZ’s focus on carefully normalising policy while keeping inflation anchored within its mandated range.
Technical Analysis: Rallies of NZD/USD could remain limited in the near term
In the daily chart, NZD/USD is consolidating after its recent pullback, holding just above the 100-day simple moving average (SMA) and the lower Bollinger band, which together define a tight demand zone. However, the Relative Strength Index (14) at 43.46 stays below the midline and hints at mildly bearish momentum, suggesting that rallies could remain limited while this indicator fails to recover toward 50.
On the topside, initial resistance level emerges in the 0.5900-0.5910 zone, representing the psychological level and the Bollinger middle band. A stronger supply anticipated at the upper boundary of the Bollinger Band near 0.5988.
On the downside, the immediate support level is seen at the 100-day SMA at 0.5845, followed by the lower limit of the Bollinger band at 0.5827. A clear break would open the door to the July 27 low of 0.5771.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- USD/JPY attracts heavy selling for the second straight day amid a combination of negative factors.
- Intervention fears and a more hawkish BoJ repricing boost the JPY amid a broadly weaker USD.
- The technical setup favors bears and backs the case for a further near-term depreciating move.
The USD/JPY pair remains under intense selling pressure for the second straight day and plummets to a nearly four-week low, around the 157.25-157.20 region during the early European session on Thursday.
Traders remain on high alert amid speculation that authorities had conducted a rate check, which signals the possibility of an intervention to support the Japanese Yen (JPY). Furthermore, more hawkish repricing of Bank of Japan (BoJ) rate hike expectations provides a strong boost to the JPY. This, along with a broadly weaker US Dollar (USD), is seen exerting downward pressure on the USD/JPY pair.
From a technical perspective, Wednesday's failed attempt to conquer the 200-period Simple Moving Average (SMA) on the 4-hour chart and the subsequent decline favor bearish traders. Moreover, the Moving Average Convergence Divergence (MACD) indicator is negative, while the Relative Strength Index (RSI) sits in oversold territory, suggesting persistent downside pressure on the USD/JPY pair.
Hence, some follow-through weakness below the 157.00 mark, towards testing the 156.60-156.50 horizontal support, looks like a distinct possibility. The downward trajectory could extend further toward challenging the August monthly swing low, around the 155.25-155.20 region, with some intermediate support near the 156.00 round figure.
On the topside, any attempted recovery is likely to attract fresh sellers near 158.00, which should cap the USD/JPY pair near the 158.40-158.50 pivotal resistance. The momentum might then lift spot prices beyond 159.00, towards the 200-period SMA, around the 160.00 psychological mark. Acceptance above the latter would be needed to ease the current bearish bias and signal a more sustainable rebound.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/JPY 4-hour chart
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.20% | 0.33% | -1.73% | -0.60% | -0.09% | 1.17% | 0.16% | |
| EUR | 0.20% | 0.53% | -1.52% | -0.41% | 0.10% | 1.32% | 0.38% | |
| GBP | -0.33% | -0.53% | -2.14% | -0.93% | -0.43% | 0.79% | -0.24% | |
| JPY | 1.73% | 1.52% | 2.14% | 1.07% | 1.66% | 2.83% | 1.82% | |
| CAD | 0.60% | 0.41% | 0.93% | -1.07% | 0.52% | 1.75% | 0.70% | |
| AUD | 0.09% | -0.10% | 0.43% | -1.66% | -0.52% | 1.22% | 0.19% | |
| NZD | -1.17% | -1.32% | -0.79% | -2.83% | -1.75% | -1.22% | -1.02% | |
| CHF | -0.16% | -0.38% | 0.24% | -1.82% | -0.70% | -0.19% | 1.02% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- Asian equity markets trade mixed, while focus shifts to the US NFP data.
- Soft US ADP Employment Change has set an unfavorable backdrop for the US NFP data.
- US President Trump doesn’t expect renewed conflict with Iran to last too long.
Stock markets in the Asian region demonstrate a mixed performance as investors shift their focus to the United States (US) Nonfarm Payrolls (NFP) data for August, which will be released on Friday.
At press time, Nikkei225 is slightly down to near 64,250, Shanghai trades 0.2% higher to near 3,450, KOSPI jumps 0.3% to near 6,585, while Hang Seng declines 0.3% to near 25,230.
Fed focus stays on inflation as TD sees modest NFP rebound
According to TD Securities, August payrolls are expected to show a modest recovery, with "August NFP likely rebounded to 95k after declining 23k in July." The bank also looks for labour market conditions to remain broadly steady, noting that "we expect the UE rate to hold at 4.1%, with balanced risks." In their view, even a stronger-than-expected print would not materially alter the policy outlook: TD argues that "a hawkish employment report will reaffirm the Fed's attention on inflation, but it will be unlikely to push the Committee towards hikes."
Meanwhile, New York Fed Bank President John Williams said on Wednesday that there is evidence “inflation continues to ease as the impact of tariffs fades”, but warned that higher energy prices have yet to spill over into other services.
Ahead of the US NFP data, ADP Employment Change data for August has come in weaker than anticipated. The US ADP reported that private employers hired 38K fresh jobs in August, fewer than 47K estimates and the prior release of 46K.
On the geopolitical front, fears of further military aggression between the US and Iran have diminished, following remarks from President Donald Trump that he doesn’t expect the renewed fighting to last “too long”, Reuters reported.
This has led to slight selling pressure in oil prices, with WTI struggling to move beyond $90.00.
Asian stocks FAQs
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.
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