NZD/USD Holding Steady Ahead of Employment Change Report, Fed Interest Rate Decision

The New Zealand Dollar is trading higher, but well off its high in a volatile session on Tuesday as traders await key data on the labor market that could influence monetary policy later this month when the Reserve Bank meets.

At 20:00 GMT, the RBNZ released its Financial Stability Report, which had little influence on the trade. Perhaps we’ll see a reaction later once traders have had a change to digest the data.

At 20:13 GMT, the NZD/USD is trading .5839, up 0.0024 or +0.42%.

At 21:45 GMT, traders will get a chance to react to the latest data on Employment Change, the Unemployment Rate and the Labor Cost Index.

The Employment Change is expected to show some movement with a 0.5% gain versus 0.00% the previous quarter. The Unemployment Rate is expected to dip to 3.2% from 3.3% and the Labor Cost Index is forecast to show a drop from 1.3% to 1.1%.

Overall, the release of the data is expected to confirm that the inflationary chasm between labor demand and supply in New Zealand continues.

After the initial reaction to the reports, traders will go back to trying to figure out what the Fed is going to say about the pace of future rate hikes, given evidence on Tuesday of a strong labor market.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier on Tuesday when buyers took out the previous main top at .5870. A move through .5775 will change the main trend to down.

The short-term range is .6162 to .5512. The NZD/USD is currently trading on the strong side of its pivot at .5387, making it potential support.

On the downside, the nearest support is .5691. On the upside, the closest resistance is a long-term 50% level at .5991.

Daily Swing Chart Technical Forecast

Trader reaction to the pivot at .5837 after the labor market data is released is likely to set the early tone on Wednesday.

Bullish Scenario

A sustained move over .5837 will indicate the presence of buyers. Taking out Tuesday’s high at .5903 will indicate the buying is getting stronger. This could trigger an acceleration into the long-term 50% level at .5991.

Bearish Scenario

A sustained move under .5837 will signal the presence of sellers. This could lead to a test of the main bottom at .5775.

Taking out .5775 will change the main trend to down and could trigger a further break into the minor pivot at .5691.