The Kiwi is trading low today has and set aside the low in the early hours of Asian session. Despite the Reserve Bank of New Zealand (RBNZ) raising the rate hike yesterday, the Kiwi pair fell the most in a week. New Zealand’s central bank has raised interest rates for the first time in seven years as it tries to rein in property prices and inflation. The Reserve Bank of New Zealand (RBNZ) increased its cash rate by a quarter of a percentage point to 0.5%. Economists had expected the hike last month but the bank held off due to an outbreak of the Covid-19 Delta variant.

New Zealand is one of the first developed economies to reverse rate cuts put in place during the pandemic. The RBNZ also said it plans to remove more stimulus measures as the economy continues to recover. Prime Minister Jacinda Ardern said on Monday that New Zealand would begin to pull away from the Zero-Covid strategy of living with the virus, the latest country to abandon its eradication effort in the face of a highly contagious delta type. Since closing its borders at the onset of the pandemic, New Zealand has recorded 4,409 Covid-19 infections and 27 deaths, the lowest number in any country, according to Johns Hopkins University data. But due to the delta strain in August, the big city of Auckland was pushed into a long lockdown. Despite more than six weeks of restrictions on the city, New Zealand registered 24 new cases in the community on Tuesday – most of which were found in Auckland.

On the other hand US Private sector employment increased by 568,000 jobs from August to September according to the September ADP National Employment Report. The report, which is derived from ADP’s actual data of those who are on a company’s payroll, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. U.S. private payrolls increased more than expected in September as COVID-19 infections started subsiding, allowing Americans to travel, frequent restaurants and reengage in other high-contact activities, the ADP National Employment Report showed on Wednesday.

Although US Senate Republican Mitch McConnell said he would allow his party to extend the federal debt ceiling until December, investors were on the verge of negotiating a US debt ceiling, which could lead to a historic collapse and a major economic loss. The Federal Reserve, which until now has been arguing that mainly inflationary pressures will be provisional, has said it will begin reducing its monthly bond purchases in November, before continuing with interest rate hikes.

The US ADP job change, prior to 568K and 340K, coincides with RBNZ’s cautious confidence, New Zealand continued rises in Covid cases and the recent gas crisis in Europe exacerbate market difficulties and support the need for a safe haven for the US dollar. Employment has been the Fed’s other main focus, and the closely watched non-farm payrolls report on Friday could provide additional clues to the timing of the Fed’s next moves.

NZD/USD 4 Hour Chart:

Support: 0.6867 (S1), 0.6820 (S2), 0.6764 (S3).

Resistance: 0.6969 (R1), 0.7025 (R2), 0.7072 (R3).

Amidst all these above catalysts, the Kiwi is on downtrend against greenback. We expect a bearish trend for NZD/USD.