NZD/USD is falling near 0.6200 due to NZ employment and US-China tensions

In Wednesday's Asian session, NZD/USD appeases bears while retesting the weekly low at 0.6210. In doing so, the Kiwi pair supports hawkish remarks made by US Federal Reserve (Fed) policymakers as well as the risk-off sentiment prevalent in the markets. However, earlier in the day, the pair was drowned by New Zealand (NZ) employment statistics for the second quarter (Q2).

The second quarter's (Q2) New Zealand employment figures drowned the New Zealand Dollar (NZD) upon release, fueling worries over the Reserve Bank of New Zealand's (RBNZ) hawkish stance. Despite this, the NZ unemployment rate unexpectedly increased to 3.3 percent from 3.1 percent projected and 3.2 percent from previous readings, while the employment change decreased to 0.0 percent from estimates of 0.4 percent and 0.1 percent.

James Bullard, president of the St. Louis Federal Reserve, disagreed with concerns about a US recession while supporting a rate increase of 50 basis points (bps). According to Reuters, San Francisco Fed President Mary Daly also stated that she is awaiting new data before deciding whether or not to slow down the rate rises. However, according to Reuters, Chicago Fed President Charles Evans expressed support for a rate increase of 50 basis points (bps) at the September policy meeting if inflation does not decrease. On the other hand, Cleveland Fed President Loretta Mester stated that the job market is in excellent form and that she does not believe the US is experiencing a recession. However, she pointed out that inflation has not "at all" dropped.

It should be recalled that China recently warned the US not to play the Taiwan card, threatened to penalize proponents of Taipei independence, and blocked natural sand shipments to the Asian economy, all of which appeared to amplify the risk-off sentiment and swamp the US dollar. In the midst of economic anxieties, there are growing concerns that the battles between the top two countries may have more detrimental effects on the entire world.

In light of this, the Wall Street benchmarks saw negative closing prices for the second straight day, while the S&P 500 Futures posted modest losses by press time. However, it should be noted that the US 10-year Treasury rates test the rise in the US Dollar Index and stall the previous day's recovery from the four-month low.

Ahead of the US Factory Orders for June and the ISM Services PMI for July, monthly readings of China's Caixin Services PMI may determine immediate NZD/USD swings. Above all, it will be crucial to keep an eye on news about China and the Fed for definitive guidance.

NZD/USD prices will move towards the 21-DMA support level near 0.6210 at the earliest if the three-week-old ascending trend line is successfully broken to the downside. The 0.6200 level may serve as a proof point for the downward trend to reaffirm the annual low at 0.6060 in the event that the Kiwi pair continues weak after 0.6210.