The New Zealand dollar has stabilized on Monday after as sharp decline of 1% on Friday. In the European session, NZD/USD is trading at 0.5945, up 0.14%. The New Zealand dollar dropped as low as 0.5927 earlier, its lowest point since November 14.
NZ Services PSI declines
New Zealand’s services sector had a dismal March, as the economy continues to show signs of distress. The BusinessNZ Services PSI slid to 47.5, down from a revised 52.6 in February and shy of the market forecast of 53.4. This was the lowest level since January 2022 and ended two straight months of expansion. The 50 level separates contraction from expansion.
The soft services release follows last week’s Business NZ Manufacturing PMI, which dropped from 49.3 to 47.1 in March, marking 13th straight month of contraction and missing the forecast of 50. These readings indicate that New Zealand’s economic downturn may worse than thought and could bring forward the central bank’s plans to lower interest rates.
The Reserve Bank of New Zealand kept rates unchanged at 5.50% for a sixth straight time last week and said that maintaining a restrictive policy would enable CPI to fall within the 1% to 3% target range before the end of the year.
The markets will be keeping a close eye on Chinese data on Tuesday. The highlight is GDP for the fourth quarter, which is expected to grow by 5%, down from 5.2% in Q3. Industrial production and retail sales are also expected to decelerate, which could translate into losses for the New Zealand dollar as China is New Zealand’s biggest export market.
NZD/USD technical
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NZD/USD is putting pressure on resistance at 0.5960, followed by resistance at 0.5986.
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There is support at 0.5910 and 0.5884.
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