NZD: NZD/USD - Drifts Higher As JOLTS Dents The USD Bid

The NZD/USD had a range overnight of 0.5899 - 0.5930, Asia is trading around 0.5910. US Yields slipped lower again, but stocks came roaring back and the USD went nowhere. NZD/USD bounced nicely off its 0.5850 support but would suspect sellers would return on any bounce back toward 0.6000, it looks like we might consolidate within the 0.5850-0.6100 range while we wait for clearer direction.

• NEW ZEALAND: Labour Market Data Likely Deteriorated In Q2. The focus of the week will be the Q2 labour market data published on Wednesday. It is expected to show that it weakened in the quarter after some signs of stabilisation in Q1. The unemployment rate is forecast to rise 0.2pp to 5.3% more than the RBNZ’s 5.2% May projection. If the data print is as weak as or weaker than the Bloomberg consensus, then a rate cut on August 20 is likely.
• (Bloomberg) -- A soft job market is likely to push New Zealand’s unemployment rate to an eight-year high of 5.3% in 2Q25. We expect employment to decline 0.1% quarter on quarter, following a 0.1% rise in 1Q25. Monthly jobs and experimental weekly payrolls data suggest there is downside risk to our already-weak employment forecast.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6000(NZD315m). Upcoming Close Strikes : 0.5970(NZD496m Aug 7), 0.6140(NZD364m Aug 7). - BBG
• CFTC Data shows Asset Managers again reduced their newly built longs in NZD +3903(Last +5034), the Leveraged community reduced their shorts slightly -6250(Last -7328).
• Data/Event : ANZ Commodity Price, Vitality Home Value

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.960 - High Apr 7
• PRICE: 95.765 @ 17:01 BST Aug 4
• SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14  
• SUP 2: 95.275 - Low Nov 14  (cont) and a key support
• SUP 3: 94.707 - 1.0% 10-dma envelope

Aussie 10-yr futures traded under pressure for much of last week, keeping prices subdued into Friday’s NFP print. The subsequent US 10y rally dragged Aussie 10-year futures with it, putting prices toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition. 

The AUD/USD had a range overnight of 0.6459-0.6490, Asia is trading around 0.6470. US Yields slipped lower again, but stocks came roaring back and the USD went nowhere. The AUD bounced nicely off the 0.6400 area but I suspect sellers might return back towards 0.6500/50 initially, though the bounce in equities overnight might suggest the correction I was looking for might not be as imminent as first thought.

• AUSTRALIA: June Consumption Growth Forecast To Rise. In a week of second tier data, the focus is likely to be on todays June household spending data which will now replace retail sales, which had its last print last week. The Q2 chain volume measure is also out. Bloomberg consensus expects June consumption values to rise 0.8% m/m to be up 4.9% y/y after 4.2% in May. The ABS noted that discounting in the month had boosted June retail sales.
• Bloomberg - “Australia looks likely to avoid a major direct blow from US tariffs. But indirect impacts - through weaker demand from trading partners and lower confidence - will be a key focus for policymakers. The degree of easing by the Reserve Bank will determine the success of a transition to private-demand-led growth. We expect it to deliver another 50 basis points of rate cuts in 2025 and more in 2026.”
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD831m), 0.6600(AUD847m). Upcoming Close Strikes : 0.6500(AUD4.16b Aug 8), 0.6600(AUD1.97b Aug 7), 0.6800(AUD1.72b Aug 7) - BBG
• CFTC Data shows Asset managers reduced their shorts slightly -49183(Last -53959), the Leveraged community added to their own shorts -13997(Last -12010).
• Data/Event: S&P Global PMI, ANZ - Indeed Job Ads, Household Spending

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P