The New Zealand dollar breathes a sigh of relief on Thursday

The New Zealand dollar rallied a bit during the trading session on Thursday, reaching as high as the 0.7050 region. I think that the market is simply showing that people don’t want to hold positions going into the Non-Farm Payroll figures coming out today, which of course is smart as we have seen a significant move lower, and of course have found ourselves at a major support level. I think that after we get the jobs number, there are a couple of scenarios that could play out. If we get a very strong job summer, that will drive interest rates higher in the United States, and we will then break down to a fresh, new low, and perhaps go looking towards the 0.68 level which is the bottom of the longer-term consolidation area that has been intact for ages.

The alternate scenario of course is that we get a very negative or light jobs figure, and that of course drives of risk appetite, because it will have equities traders jumping into the market. That should drive the New Zealand dollar higher, but it’s not until we clear the 0.71 level that I am convinced that we had formed an intermediate-term bottom. I suspect that we have more likelihood of seeing selling than buying, but I also recognize that anything can happen with these announcements. Pay attention to the 0.71 level on a search higher, it will tell us whether we can pick up momentum or not. Otherwise, I think 0.68 it is very likely.