NZD/USD drops toward 0.6000 as DXY holds above 100
- NZD/USD struggled to capitalize on New Zealand's upbeat jobs report.
- USD preserves its strength after ADP's private sector employment data.
- RBNZ will release Inflation Expectations data for second quarter.
The NZD/USD pair registered modest gains during the Asian session on Wednesday as the NZD gathered strength on the New Zealand's jobs report. However, the pair failed to push higher after advancing above 0.6070 and reversed its direction pressured by the strong performance of the USD. As of writing, the pair was down 0.5% on the day at 0.6020.
The data published by Statistics New Zealand reported that the Unemployment Rate in the first quarter rose to 4.2% in the first quarter and came in better than the market expectation of 4.3%. Moreover, the Employment Change increased to +0.7% from 0.1% in the same period. Nevertheless, the NZD struggled to take advantage of this data as it was not reflecting the impact of the coronavirus outbreak on the labour market fully.
DXY extends rally
In the second half of the day, the US Dollar Index (DXY) edged higher after the ADP Research Institue reported that the private sector employment in the US declined by 20.2 million in April. Additionally, the selling pressure surrounding the major European currencies provided a boost to the USD demand. At the moment, the US Dollar Index is rising 0.25% on the day at 100.05 and remains on track to close the third straight day with gains.
Assessing the ADP data, "the reaction in financial markets is limited, especially as some estimates stood at -21 million while others were closer to -20 million," noted FXStreet analyst Yohay Elam. “A sell-off in shares and a general risk-off environment may send everybody to the safe-haven dollar, with the yen also potentially coming under attack.”
During the Asian session on Thursday, the Reserve Bank of New Zealand (RBNZ) will publish the Inflation Expectations for the second quarter.
Technical levels to watch for