- NZD/USD struggles to capitalize on its modest intraday uptick to over a one-week peak.
- China's Caixin Manufacturing PMI unexpectedly contracted in July and acts as a headwind.
- The post-FOMC USD selling and the risk-on mood continue to lend support to the Kiwi.
The NZD/USD pair reverses an intraday dip that followed the disappointing release of the Chinese PMI and touches a one-and-half-week high during the Asian session on Thursday. Spot prices currently trade above mid-0.5900s and seem poised to build on this week's goodish rebound from the lowest level since April 19.
A private survey showed that business activity in China's manufacturing sector unexpectedly shrank for the first time in nine months in July and pointed to underlying trouble in the world's second-largest economy. In fact, China's Caixin Manufacturing PMI fell from 51.8 in June to 49.8 last month, missing consensus estimates for a reading of 51.5 and undermining demand for antipodean currencies, including the Kiwi.
The New Zealand Dollar (NZD) is further undermined by bets for an early interest rate cut by the Reserve Bank of New Zealand (RBNZ), especially after data showed that the domestic annual CPI rate fell to its lowest rate in three years in the June quarter. The US Dollar (USD), on the other hand, languishes near a two-week low touched after the Federal Reserve (Fed) opened the door to reduce borrowing costs as soon as September.
The US central bank acknowledged the recent progress on inflation and cooling in the labor market. Adding to this, Fed Chair Jerome Powell, speaking at the post-meeting press conference, signaled the likelihood of an early rate cut if inflation stays in line with expectations. This drags the US Treasury bond yields to a multi-month low, which continues to weigh on the USD and should act as a tailwind for the NZD/USD pair.
Apart from this, a generally positive tone across the global equity markets could further undermine the safe-haven buck and lend some support to the risk-sensitive Kiwi. Moving ahead, there isn't any relevant market-moving economic data due for release from the US on Thursday, leaving the NZD/USD pair at the mercy of the USD price dynamics. The focus, meanwhile, will remain on the US Nonfarm Payrolls (NFP) report on Friday.
Economic Indicator
Caixin Manufacturing PMI
The Caixin Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by Caixin Insight Group and S&P Global, is a leading indicator gauging business activity in China’s manufacturing sector. The data is derived from surveys of senior executives at both private-sector and state-owned companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation.The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for CNY.
Read more.Last release: Thu Aug 01, 2024 01:45
Frequency: Monthly
Actual: 49.8
Consensus: 51.5
Previous: 51.8
Source: IHS Markit
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 sticks to recovery gains above 1.1500 amid US Dollar pullback
EUR/USD holds its winning streak for the third successive day, holding firm above 1.1500 in the European session on Friday. The pair recovers as the US Dollar loses ground, possibly driven by a technical pullback and receding fears over a likely US military attack on Iran. Geopolitics remain in focus.
GBP/USD holds the rebound near 1.3500 despite weak UK Retail Sales data
GBP/USD has found demand and retakes 1.3500 in European trading on Friday. The pair seems to have ignored the downbeat UK Retail Sales data for May. Broad US Dollar weakness, amid easing Middle East tensions, keeps the major underpinned.
Gold price struggles near weekly low amid fewer Fed rate cut bets, despite Middle East tensions
Gold price is seen consolidating its intraday losses to over a one-week low and trades just below the $3,350 level during the first half of the European session. The US Federal Reserve earlier this week trimmed the outlook for rate cuts in 2026 and 2027, which is seen acting as a tailwind for the US Dollar and undermining demand for the non-yielding yellow metal.
Shiba Inu Price Forecast: SHIB demand wanes as holders offload meme tokens
Shiba Inu (SHIB) extends its decline at the time of writing on Friday after dropping nearly 5% so far this week. The on-chain data supports a correction ahead, as SHIB holders are unloading tokens amid the escalating Iran-Israel war.
In the Eurozone, inflation is also a monetary phenomenon
Monetary aggregates continue to be closely monitored by the European Central Bank (ECB), a sign that, despite the passage of time and the increasing complexity of financing circuits, quantitative theory remains relevant.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.