Source: PaxForex Premium Analytics Portal, Fundamental Insight

The New Zealand Terms of Trade Index for the first quarter contracted by 1.5% quarterly, and Export Volume rose by 1.0% quarterly. Economists predicted a drop of 1.3% and a flat reading of 0.0%. Forex traders can compare this to the New Zealand Terms of Trade Index for the fourth quarter, which increased 1.5% quarterly, and to Volume, which decreased 2.1%. Export prices for the first quarter dropped by 6.9% quarterly and Import Prices by 5.4%. Economists predicted a decrease of 2.2% and 1.3%. Forex traders can compare it to Export Prices for the fourth quarter, which contracted by 0.6%, and Import Prices by 2.1%.

The US NFP Report for May is predicted to show 180K job additions and an unemployment rate of 3.5%. Forex traders can compare this to the US NFP Report for April, which showed 253K job additions and an unemployment rate of 3.4%. Private Payrolls for May are predicted to show 160K job additions and Manufacturing Payrolls 8K job additions. Forex traders can compare this to Private Payrolls for April, which showed 230K job additions, and Manufacturing Payrolls, which showed 11K job additions. The Average Work Week for May is predicted at 34.4 hours. Forex traders can compare this to the Average Work Week for April, reported at 34.4 hours. Average Hourly Earnings for May are predicted to increase by 0.4% monthly and 4.3% annualized. Forex traders can compare this to Average Hourly Earnings for April, which rose 0.5% monthly and 4.4% annualized.

The ADP report released yesterday showed a stronger-than-expected gain in private payrolls. While the relationship between the ADP and the NFP is far from perfect, it makes today’s NFP reading more interesting, with the Fed debating a pause in monetary tightening. A stronger-than-expected NFP reading could increase the chances for a 25 basis point interest rate hike in June.

The forecast for the NZD/USD remains bullish after this currency pair completed a breakout above its horizontal support area. Volatility could remain high with the Kijun-sen and the Tenkan-sen flat. The narrow Ichimoku Kinko Hyo Cloud shows signs of bullishness, following a bullish crossover, expected to support more upside. The Senkou Span A flatlined after the bullish crossover, but the Senkou Span B began to drift higher, narrowing the Ichimoku Kinko Hyo Cloud. Traders should also monitor the CCI after its breakout from extreme oversold territory. This technical indicator has plenty of upside potential, and a move above the zero barrier could accelerate the current uptrend. Can bulls maintain control over the NZD/USD and push price action into its horizontal resistance area, which engulfs the Ichimoku Kinko Hyo Cloud? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.

Should price action for the NZD/USD remain inside the or breakout above 0.6055 to 0.6110 zone, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Long Position
• Entry Level: Long Position @ 0.6090
• Take Profit Zone: 0.6230 – 0.6275
• Stop Loss Level: 0.6025

Should price action for the NZD/USD breakdown below 0.6055, PaxForex recommends the following trade set-up:

• Timeframe: D1           
• Recommendation: Short Position
• Entry Level: Short Position @ 0.6025
• Take Profit Zone: 0.5955 – 0.5985
• Stop Loss Level: 0.6055

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