Consider buying the NZD/USD currency pair with a target of 0.6360 and a stop loss of 0.6260. A weaker-than-expected US NFP and hawkish RBNZ rhetoric may support the pair’s bullish momentum.

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New Zealand dollar/United States dollar climbs 0.5 percent to 0.6310 before Friday’s European trading day. In anticipation of US Nonfarm Payrolls (NFP) data, the Kiwi pair has welcomed the general weakness of the US Dollar. The gap between the Fed and the RBNZ may bolster this optimism.

The Federal Reserve has proposed stopping rate hikes after pushing benchmark interest rates to their highest level since 2007. Chairman of the Federal Reserve Board Jerome Powell has stated that current monetary policy is restrictive enough.

After that, the NZD/USD appreciates as market expectations for a Fed rate hike in September 2023 increase and as US data on Thursday is mixed.

However, data for US Nonfarm Productivity and Unit Labor Cost in Q1 2023 were inconsistent. Unit Labor Cost increased by 6.3% from the previous quarter and 5.5% from market expectations, while Nonfarm Productivity declined to -2.7% from 1.6% and -1.8%, respectively. From $-70.6B and the market’s forecast of $-63.3B, the US goods and services trade deficit narrowed to $-64.2B. Initial Jobless Claims increased to 242K from 240K forecasted and 229K historically for the week ending April 28. Furthermore, Fed Fund Futures suggest a rate cut in late 2023.

Even though RBNZ Governor Adrian Orr warned of severe repercussions for farms earlier in the week, a 0.50% rate hike has already appeased NZD/USD hawks.
Weak gains for the NZD/USD bulls are possible before the April US jobs data. Headline US Nonfarm Payrolls (NFP) are expected to drop to 179K from 236K, but early indications are promising.

Trade Idea

You might enter a long position in NZD/USD with a stop loss of around 0.6260 and a target of 0.6360. A weaker-than-expected US NFP and hawkish RBNZ speech may bolster bullish momentum for the pair.