- NZD/USD grinds lower, seesaws around intraday high of late.
- China NBS Manufacturing PMI contracts, Caixin Manufacturing PMI improves in August.
- NZ PM Ardern backs Auckland boundary limit despite the alert level 2 conditions.
- US Senators agree on stop-gap funding but debt ceiling, stimulus and other risk catalysts loom.
NZD/USD holds lower ground near the five-week bottom, mildly bid of late around 0.6880 during early Thursday. In doing so, the kiwi pair pays a little heed to the mixed PMI data from China while concentrating on the US dollar pullback. However, cautious sentiment keeps the recovery moves in check.
Although China’s official NBS Manufacturing PMI for August dropped below 50.00 level for the first time since February 2020, the Caixin Manufacturing PMI rose past 49.5 expected and 49.2 prior to the 50.00 level at the latest. Further, the official Non-Manufacturing PMI rose past 47.5 prior and 52.7 expected to 53.2.
Earlier in the day, New Zealand Building Permits rose past 2.3% forecast to 3.8% for August whereas the ANZ Business Confidence for September dropped past -6.8 previous readouts to -7.2 while the ANZ Activity Outlook remained unchanged at 18.2% for the stated month.
US policymakers’ ability to avoid the government shutdown seems to underpin the latest risk-on mood, helping the NZD/USD. Also on the positive side is the news of AstraZeneca’s covid vaccine showing 74% efficacy in the large US trial seems to have underpinned the latest hopes of overcoming the Delta covid crisis.
Furthermore, mixed concerns over the emergency alert level conditions in Auckland after the recent jump in covid numbers also confuse NZD/USD traders. While New Zealand Prime Minister (PM) Jacinda Ardern states, per NZ Herald, to keep the state boundary intact even during the next weeks’ level 2, senior Government Minister Chris Hipkins rules out challenges to easing the NZ activity restrictions.
However, the US diplomats are yet to solve the riddle concerning the infrastructure spending bill and extension of the debt ceiling, which are the key issues challenging the market sentiment of late. Also, the Fed's tapering woes and fears that China's power cut issues will join the Evergrande saga to drown the world’s second-largest economy back towards the pandemic-era economic performance question the risk-on mood.
Against this backdrop, the US 10-year Treasury yields print 3.0 basis points (bps) of a fall to 1.51%, extending pullback from a six-month high flashed the previous day. However, the S&P 500 Futures rise 0.30% intraday to keep Wednesday’s rebound from a weekly low.
While the mixed data may not have helped the NZD/USD prices but the updates from the US Senate can keep the buyers hopeful for a while before the Fedspeak and China woes regain the market’s attention.
Technical analysis
Unless bouncing back beyond July’s low near 0.6880, NZD/USD remains vulnerable to visit the yearly bottom surrounding 0.6800.
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