- NZD/USD takes the bids to defend post-Powell rally as China data favor the Kiwi pair bulls.
- China Caixin Manufacturing PMI for November rose past market forecasts and prior readings.
- Easing Covid controls in Beijing, dovish Fedspeak favor buyers despite the Sino-American tension.
- Fed’s preferred inflation gauge, US ISM Manufacturing PMI will decorate the calendar.
NZD/USD stays firmer around 0.6325, the highest level since mid-August, after higher-than-expected China activity data during early Thursday. In doing so, the Kiwi pair defends the recent upward trajectory backed by the broad-based US Dollar weakness and risk-on mood.
China Caixin Manufacturing PMI rose to 49.4 in November versus 48.9 market forecasts and 49.2 previous readings.
Earlier in the day, the NZD/USD pair cheered the broad US Dollar weakness amid the risk-on mood and recently dovish bias of the Federal Reserve (Fed) officials, including Chairman Jerome Powell.
On Wednesday, Fed’s Powell stated that it makes sense to moderate the pace of interest rate increases while also suggesting that the time to slow the pace of rate hikes could come as soon as the next meeting in December. On the same line was a member of the Fed Board of Governors Lisa D. Cook who praised the inflation data to signal that the Fed would likely take smaller steps as it moves forward.
It should be noted that the recently easing virus-led activity controls in China and downbeat US data also weighed on the US Dollar the previous day. That said, the US ADP Employment Change data for November as it marked the lowest readings since January 2021 with a 127K figure for November versus the 200K forecast and 239K previous readings.
Alternatively, a recent increase in the US inflation expectations, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data. Additionally, the downbeat comments from US National Security Adviser Jake Sullivan also challenge the market sentiment and the NZD/USD buyers.
Even so, S&P 500 Futures print mild gains and the equities in the Asia-Pacific region grind higher by tracking Wall Street gains. Further, the US 10-year Treasury bond yields remain pressured around 3.61% after refreshing a two-month low the previous day.
Looking forward, risk catalysts could entertain NZD/USD pair traders but major attention will be given to the Fed’s preferred inflation gauge, namely US Core Personal Consumption Expenditure (PCE) Price Index for October, expected 5.0% YoY in October versus 5.1% prior. Also important to watch will be the monthly prints of the US ISM Manufacturing PMI for November, expected 49.8 versus 50.2 prior.
Also read: US October PCE inflation & ISM Manufacturing PMI Preview: Seen through Fed’s eyes
Technical analysis
A six-month-old resistance line, near 0.6330 at the latest, appears the key hurdle for the NZD/USD bulls to cross to keep the reins. Otherwise, a pullback towards the 200-DMA level around 0.6235 can’t be ruled out.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.0900 after EU inflation data
EUR/USD stays on the back foot and trades below 1.0900 on Friday. The data published by Eurostat showed on Friday that the annual HICP declined to 6.9% in March from 8.5% in February, compared to the market expectation of 7.1%. Investors now await PCE inflation data from the US.
GBP/USD remains pressured below 1.2400 ahead of US PCE data
GBP/USD is trading below 1.2400, consolidating its retreat from two-month highs at 1.2423 in the European session. The pair is weighed down by the mixed UK economic data and the US Dollar comeback. Focus now remains on the US PCE data.
Gold stalls after Fed officials signal more hikes may be needed
Gold price (XAU/USD) stalls after early gains on Friday, exchanging hands in the $1,970-80 range in the European Session, after the release of poorer-than-expected US data provided the safe-haven with a bid.
Will Dogecoin price pull an XRP and rally 60% next week?
Dogecoin price has been in a tight range bound movement since November 22. The recent recovery above the range low looks promising and hints at an explosive move for next week.
US February PCE Inflation Preview: Bad news for the Dollar, good news for the Fed? Premium
United States Core Personal Consumption Expenditures Price Index is expected to stay at 4.7% YoY. Easing inflation would be welcome news for the Fed, but not for Dollar bulls.