NZD/USD treads water below 0.5670 with both currencies on the back foot

• The New Zealand Dollar hovers below 0.5670 against its US counterpart on Wednesday.
• Hopes of an RBNZ rate cut in December are acting as headwinds for NZD recovery.
• The US Dollar remains on the defensive after weak US employment figures.

The New Zealand Dollar is trading practically flat, right above 0.5650 against the US Dollar, with both currencies losing ground against their main peers on Wednesday. The Kiwi is failing to put a significant distance from the seven-month lows near 0.5600, as weak New Zealand macroeconomic data keeps providing reasons for the RBNZ to cut interest rates further in December.

On Tuesday, the RBNZ Inflation Expectations report showed that price projections for the fourth quarter remained steady at 2.8%, unchanged from the previous quarter, despite the higher consumer prices figures. CPI data released last week revealed that consumer inflation accelerated to a 3% yearly rate in Q3, its highest level in the year.

These numbers come after last week's downbeat employment report, showing that job creation stalled in Q3, while the Unemployment Rate increased to its highest level in nine years, at 5.3%. Against this background, hopes that the New Zealand central bank will be forced to cut interest rates further before the year's end remain elevated, which keeps the Kiwi's upside attempts limited.

The US Dollar, however, is failing to capitalise on NZD's fragility, weighed down by weaknesses of its own. The US ADP Employment report showed that US businesses shed an average of 11,250 jobs per week in late October, boosting hopes of a Federal Reserve interest rate cut in December and undermining speculative demand for the Greenback.