New Zealand Dollar comes under pressure after sharp deterioration in labor market

The US Dollar (USD) shows a slight downturn against its major counterparts as investors await key economic data from the United States, including the ADP Employment Change and the ISM Services Purchasing Managers’ Index (PMI) for July. At present, the US Dollar Index (DXY), which measures the Greenback's value against six significant currencies, has slipped to approximately 99.80.

The table below presents the percentage change of the USD against listed major currencies today, indicating that the USD was the weakest against the British Pound.

The impending data release may have a substantial impact on the Federal Reserve's (Fed) interest rate projections, as policymakers have ceased providing "forward guidance" on monetary policy. Estimates suggest that the ADP report will reveal a smaller-than-anticipated increase of 70,000 private sector payrolls, compared to the 98,000 added in June. Meanwhile, the ISM Services PMI is projected to come in higher at 54.5, up from 54.0 in June.

Currently, the CME FedWatch tool indicates a 56.7% probability of a Federal Reserve rate hike during the September policy meeting. On the global front, investors remain eager for updates on the ongoing negotiations between the United States and Iran concerning the Strait of Hormuz and Tehran's nuclear ambitions. On Tuesday, US Treasury Secretary Scott Bessent stated in a CNBC interview that Washington might reach an agreement with Iran on reopening the Strait of Hormuz within the next two days.

Such a development could exert downward pressure on oil prices by mitigating supply disruptions and stabilizing inflation expectations.