Bulls in the NZD/USD pair reappear and aim for 0.5650

NZD/USD is correcting after hitting a 30-month low at the start of the week; it is currently trading 0.2% higher amid sluggish holiday market conditions. Until now, the NZD/USD exchange rate has fluctuated between 0.5592 and 0.5616.

The mixed US Nonfarm Payrolls report was generally positive for the dollar and US rates, but it was difficult for the Federal Reserve to deal with the inflation headwinds ahead of this week's US Consumer Price Index and US Retail Sales data. After the results were released, the bird decreased and moved in on a test below 0.5600. The price has climbed at the start of the week to face opposition in the near term, as shown in the charts below.

Also widely anticipated by traders are the minutes from the previous Fed meeting. According to analysts at TD Securities, the September dot plot displays a higher-than-expected Fed Funds terminal rate of 4.625% with a relatively uniform distribution of dots around this level." How much of this was discussed at the September meeting is the question. These conversations were probably more hawkish than the current dovish pivot markets narrative, given the trends in core CPI inflation.

In a report published on Monday morning, analysts at ANZ Bank claimed that rising market expectations of Fed rate hikes over the weekend helped the US usd. The New Zealand dollar retraced down below 0.56 as a result.

Although the numbers were better than expected and the unemployment rate fell, the rate of job growth slowed and the monthly salary increase was as anticipated. With all eyes now on the US CPI data later this week, the USD/JPY exchange rate is about 2.2% higher than it was late last Tuesday.

"Local factors are simply absent, and anecdotally, the current account deficit in New Zealand is attracting more unfavorable attention. The NZD needs positive rather than negative attention, which is now lacking in a world where US interest rates are leading the way higher.