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NZD/USD: Employment Report To Decide Next Step for Kiwi

The NZD/USD followed in the footprints of the Aussie, rallying against its major rivals. I wanted to focus on the Kiwi because it has an important release coming up - the country's quarterly employment report - which will have a big impact on what is likely next for this pair in the short term.
 

  • This pair has been in a 4-month sideways ranging, with fake break-out from a head and shoulders pattern, and a break below critical support at 0.8110 last week, but then being unable to hold that support as resistance.
  • The rally today, which was about 160 pips from bottom to top, has smacked into the 200-daily EMA, as well as a key pivot at 0.82 which has acted both as support and resistance for the pair during its ranging action.
  • Therefore, the set-up is fairly clear. If employment data surprises to the topside, then the pair may extends its move, with targets above at 0.83 and then 0.8340.
  • However, if data disappoints then, the rally will likely be faded, and the Kiwi will likely be pushed back towards 0.8115 if not the lows from this week. If that happens, it could open up the area below.

For reference, here's the quarterly employment change (q/q) for NZ going back the last 5 years or so:

The expectation is for a 0.6% gain in the 4th quarter after the 1.2% rise in the 3Q.