- Stock markets were bullish along with commodity-linked assets
- New Zealand dollar gains after seeing strong growth in local jobs
- AUD/NZD facing significant downward pressure
The US market indices had a strong close yesterday, and the cycle-sensitive Australian and Canadian dollars rallied along; the attraction for haven-linked US dollars waned as the hopes for another coronavirus stimulus bill stayed up.
But, if the policymakers are seen to be delaying the bill, including its ratification and implementation, markets can quickly take a risk-off stand. But, the lawmakers are under pressure to deliver as the 2020 election is fast approaching and they will not fancy creating any unfavourable situation.
New Zealand Posts Good Employment Numbers
The NZD dollar might extend its earlier rally during the US session as the local jobs data came in much better than expected. The country’s second-quarter unemployment fell to 4 Percent much less than the 5.6 Percent estimate, with the year-on-year employment surging by 1.2 Percent far beating the -1.2 Percent forecast. The participation rate remained the same at 69.7 Percent, while there was a revision in prior reading to 70.5 Percent.
The currency could also be helped by the buoyancy in Asian trading earlier, and other risk-on currencies and commodities might rise. US dollars and Japanese Yen might be on the backfoot in this market mood. The New Zealand dollar’s strength could put pressure on AUD/NZD when it is at a critical level.
AUD/NZD To Move Lower
AUD/NZD might face resistance from a 5-year descending resistance channel which it couldn’t break in earlier attempts in late May and early June. A retreat here will put a brake on the early-July uptrend and bears gaining a foothold on the sentiments. The pullback, if fruitful, will have strong support to breakdown at 1.0555 -the bottom of the current uptrend.