NFP Data Could Favour NZD

The New Zealand dollar (Currency:NZD) is, like the Australian dollar, finding the going on Friday to be tough.

Good news from the US was bad news for the commodity currencies

Richard Driver at Caxton FX says that, once again, it all came back down to the QE3 tapering issue:

"Good news from the US manufacturing sector and labour market triggered market concerns that such developments could be enough to see the Fed taper QE3 as soon as next month. If this occurs, currencies like the NZD can expect to suffer as a result.

"GBP/NZD is trading up at 1.92 and we are expecting more of the same today – 1.94 is a realistic target."

US Non-Farm Payrolls could offer NZD relief

Chris Tedder at Forex.com confirms that US dollar strength is a key worry for those bulls backing gains in the NZ dollar:

"NZDUSD lost ground overnight on the back of broad flock towards the US dollar, sending the pair to a support zone around 0.7850 – 200 4hr SMA, 61.8% from July’s high and trend line support.

"A break here could see the sell-off intensify, while a failed break of this level could end the pair’s recent downward trend. If the pair moves higher from here it would remain within its recent upward channel, which may be bullish and may see the pair break back above 0.8000 in the near-term.

"However, the biggest event for NZDUSD, along with the rest of the market for that matter, is tonight’s US labour market data. The market is expecting a change in NFP of around 185K and the unemployment rate to drop to 7.5% from 7.6%. Leading indicators and our proprietary model suggests that the market may be pleasantly surprised by the data, in which case the USD may increase in value."

Shaun Osborne at TD Securities gives his views for the US dollar and commodities ahead of the release:

"The USD is tracking higher, commodities are under pressure (especially gold) and US long-term rates are nearing the early July high of 2.75% ahead of this morning’s US NFP data which is expected to add further support to expectations for the Fed to commence tapering asset purchases in September.

"Liberal use of forward guidance among the major central banks has, so far, helped equities remain immune to the tapering speculation."

Osborne warns that market expectations for today’s data releases have crept a little higher over the course of the week, with the “whisper” number now centring on 200k-plus gains after the better than expected ADP/GDP/ISM data earlier in the week.