Why do NZD, CHF await Powell, ADP Employment Data?

The NZD/USD pair hovers around 0.6200 as investors await US ADP Employment. The pair also encounters an obstacle around the present rate 0.6200 as anxiety rises ahead of Fed Powell’s remarks on Wednesday. Fed’s interest rate hikes account for weaker projections for US employment data.

On a different front, the reopening of few manufacturing sites in China also triggers some optimism and improvement of risk appetite. This is why the pair is expected to travel from ups to downs and vice versa, as investors eye the speech by Fed Chair Jerome Powell to get clarity over rate hike deceleration expectations.

A few risk-sensitive currencies are still solid. The US Dollar index is facing barriers in sustaining above the critical 106.80 level. The 10-year US Treasury yields have recovered dramatically above 3.75%. The recovery in the US yields could be linked to a speech from Jerome Powell ahead as it will trim ambiguity over interest rate projections for December monetary policy meeting.

Economic data will be crucial for the market participants in the United States Automatic Data Processing (ADP) Employment data. The US economy has added fresh 200k jobs in the labour market lower than the prior 239k reading. This is the outcome of accelerating interest rates by the Fed, which forced businesses to postpone hiring plans to accommodate their higher interest-related obligations.

The GDP data will be crucial for investors. The annualized GDP for the third quarter is expected to remain unchanged at 2.6%. A decline in the growth rate would boost expectations of inflation easing.

The NZ dollar is still impacted by China’s unrest, being one of the leading trading partners. Public protests against Covid-19 lockdowns is expected to make the epidemic situation weaker in the coming weeks.

Back to the market sentiment, given China-linked optimism, softer US data and the struggling US dollar, on Wednesday markets will await Powell’s first speech since November FOMC meeting for clues and his remarks will be crucial for some pairs, including the USD/CHF, amid hawkish hopes.

The USD/CHF pair is at a one-week high hovering around 0.9550 as traders await the key ADP Employment data. The Swiss Franc’s pair rose during the last four days amid the market’s cautious optimism.

Wall Street closed mixed and the US 10-year Treasury bond yields ended Tuesday on a firmer footing, up six basis points (bps) to 3.748. The same helped the US Dollar Index to print limited gains around 106.80 despite softer US statistics. The reason could be linked to the hawkish comments supporting the US Fed’s steadily high-interest rates, even if a mild cut in the aggression is expected.

Fed’s John Williams and James Bullard were the latest supporters of higher rates. On the other hand, the US Conference Board Consumer Confidence Index dropped to 100.2 in November versus 102.2 prior (revised down from 102.5).

The Swiss GDP for the Q3 declined to 0.5% YoY versus 1.0% market forecasts and the 2.2% prior reading (revised down from 2.8%).

Wednesday’s ADP Employment Change for November could serve as early signal for Friday’s US NFP data, that is expected to record 200K versus the 239K prior reading, this will also be important to watch. One other reading to await from the US will be the country’s Gross Domestic Product for Q3 which is expected to confirm 2.6% annualized growth, and this data is on the economic calendar for Wednesday as well.