NZD/USD Remains Rangebound, Employment Data Shortly

The kiwi continued its rangebound trading on Tuesday, finishing the session 0.20% higher at 0.5953. Focus today will be on New Zealand's employment data and China trade balance.

• The NZD/USD has recovered and trades back above 0.5950 after hitting a nine-month low, driven by fears of a US recession following weak job data on Monday. Apart from the large gap down briefly on Monday the pair has been wrapped around 0.5950 for the past week.
• The market is expecting to see a rise in the unemployment rate today, with consensus at 4.7%, up from 4.3% in the previous quarter.
• Initial support is 0.5913 (July 6 lows) with major support at 0.5850 (July 5 lows), while resistance is at 0.5977 (20-day EMA). The overall outlook remains neutral to bearish as long we we hold below the 20-day EMA, the 14-day RSI is now 42, after reaching multi year lows of 24 late July, while the MACD indictor is now showing increasing green bars.
• Fonterra's GDT price index rose 0.5% to $3,680, with milk powder prices rising 2.4% to $3,259 per mt.
• The OIS market pricing cooled on Tuesday, after fully pricing in a cut the August contract is now showing a 86% chance of a 25bps cut, and 98bps of cuts heading into year-end.
• The NZ-US 2yr swap spread is 2bps lower this morning at 17bps, after hitting 43bps on Tuesday.
• Expiries: 0.5880 ($500m), 0.5950 ($200.84m), 0.6085 ($260m) August 7 NY cut
• Today, we have Employment data at 8:45 AEST