Kiwi Steadies as China PMI Surprise Offsets Weakness

Key Moments

NZD/USD Holds Lower Range Despite China PMI Lift

NZD/USD stayed under pressure for a second straight session, changing hands around 0.5910 during Monday’s Asian trading. The pair, however, pared part of its intraday decline as the New Zealand Dollar found modest support following the latest Chinese activity data.

China’s official NBS Manufacturing Purchasing Managers’ Index (PMI) edged up to 49.8 in August, topping the 49.7 consensus forecast and improving from July’s 49.2. The Non-Manufacturing PMI was unchanged at 49.0. Given the tight trade links between New Zealand and China, even incremental changes in Chinese economic indicators tend to feed directly into sentiment toward the New Zealand Dollar.

Domestic Sentiment Softens Ahead of RBNZ Decision

New Zealand’s internal backdrop was less supportive. The ANZ Business Confidence Index slipped to 53.7 in August from 56.1 in July, indicating a deterioration in corporate sentiment. The ANZ Activity Outlook also weakened, dropping to 48.2 from 49.3.

Market participants remained wary in the run-up to the Reserve Bank of New Zealand’s upcoming policy announcement. Pricing reflected broad expectations for a 25-basis-point rate increase, following a similar move in May, keeping attention tightly focused on the RBNZ’s guidance and tone.

Positioning and Expectations Around RBNZ Policy

TD Securities highlighted that the “hawkish July RBNZ rate hike” has driven a material shift in currency positioning. According to the firm, investors have “sharply pared back [their] short NZD positioning vs both the USD and AUD.” The bank added that subsequent “NZ data releases since then have not provided enough evidence for market pricing to deviate from the RBNZ’s latest OCR guidance.” In their assessment, this environment has reinforced market views, as “consensus continues to expect another RBNZ rate hike at the upcoming meeting.”

US Dollar Backed by Hawkish Fed Rhetoric

On the US side, the Dollar remained underpinned by firm policy expectations following remarks from Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium. Warsh indicated that policymakers “have work to do” if inflation does not clearly move toward target at a satisfactory pace, which markets interpreted as supportive of further tightening.

After his comments, the CME FedWatch tool showed traders assigning a 57.5% probability to at least a 25-basis-point rate hike at the Federal Reserve’s September 15–16 meeting, up from 35% prior to the speech. This repricing of Fed expectations provided an additional tailwind for the USD against higher-beta currencies such as the NZD.

Technical Picture: NZD/USD Holds Above Key Averages

On the daily chart, NZD/USD is trading at 0.5910. The pair maintains a mildly constructive short-term profile, as price remains above the 50-day Exponential Moving Average (EMA) while facing only modest resistance from the nine-day EMA overhead. The 14-day Relative Strength Index (RSI) near 54 points to slightly positive momentum without signaling overbought conditions, suggesting that buyers still retain scope to challenge higher levels as long as trend support holds.

On the upside, a decisive move above the nine-day EMA at 0.5930 would likely clear the way for further appreciation. On the downside, the 50-day EMA at 0.5864 serves as the first notable support. A daily close below that threshold would undermine the constructive tone and suggest risk of a deeper corrective pullback.