NZD/USD Fundamental Forecast – May 9, 2016

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Published: May 6, 2016, 03:09 UTC

The NZD/USD dipped this morning by 31 points as traders responded to the stronger US dollar and a decline in commodities. The kiwi fell to 0.6853. Yahoo

NZD/USD Fundamental Forecast – May 9, 2016

The NZD/USD dipped this morning by 31 points as traders responded to the stronger US dollar and a decline in commodities. The kiwi fell to 0.6853. Yahoo news reported the US dollar index, which measures the greenback against a basket of currencies, advanced to a week-high after two Fed officials, James Bullard and John Williams, offered upbeat comments on the US jobs market and suggested an interest rate hike in June is not off the table. Today, the focus will turn to the US government’s monthly jobs data which is expected to show US companies added 200,000 workers to their payrolls in April, according to a Bloomberg poll.

“The market is awaiting the key release of the week, the US employment report,” Bank of New Zealand senior market strategist Kimberly Martin said in a note. “In order to maintain the rebound in the US dollar, a solid payrolls release would likely need to be accompanied by stronger-than-expected average hourly earnings growth. This could prompt the market into increasing its expectations for Fed rate hikes this year. Currently the market only prices around a 50 percent chance of one more Fed rate hike by year-end.”

With no domestic data scheduled for today, the fate of the kiwi heading into the weekend lies with the release of the US employment report, Martin said.

Fed policy makers gather on June 14-15 after raising rates from near zero in December and then keeping them on hold for the next three meetings. The Labor Department report is forecast to show the third straight month of payroll gains of 200,000 or more.

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