Kiwi Dollar Climbs as Chinese Services Data Tops Forecasts

Key Moments

NZD/USD Rebounds on Stronger Chinese Services Activity

The New Zealand Dollar recovered ground against the US Dollar in early Asian trading on Thursday, with NZD/USD advancing to around 0.5860 and breaking a four-session losing run. The move higher followed stronger-than-expected Chinese services data, which supported the China-sensitive Kiwi.

Investors are also positioning ahead of US labor market figures for August, scheduled for release on Friday, which could further influence the pair’s direction.

Chinese PMIs Offer Support to the Kiwi

Fresh data from RatingDog on Thursday showed that China’s Services Purchasing Managers’ Index (PMI) increased to 51.4 in August from 50.4 in July, exceeding the market expectation of 50.6.

Earlier in the week, China’s NBS Manufacturing PMI had improved to 49.8 in August from 49.2 in July, beating the forecast of 49.7. The NBS Non-Manufacturing PMI remained unchanged at 49.0 in August.

These signs of stabilization and modest improvement in China’s manufacturing and services activity provided a tailwind to the New Zealand Dollar, as China is a key export destination for New Zealand. As a result, the Kiwi drew support from the perception of firmer Chinese demand.

Fed’s Hawkish Tone Bolsters the US Dollar

The upside in NZD/USD was tempered by firmer expectations of tighter US monetary policy. Hawkish remarks from Federal Reserve Chair Kevin Warsh at the Jackson Hole meeting have reinforced the possibility of another rate increase this month, lending underlying support to the US Dollar.

Last week, Warsh reiterated the Fed’s focus on its inflation objective and signaled that policymakers are not yet persuaded that inflationary pressures are easing sufficiently. Following his comments, pricing in fed funds futures shifted notably.

According to the CME’s FedWatch tool, traders currently assign a 62.3% probability to a 25-basis-point rate increase in September, up from around 40% prior to Warsh’s speech.

NZD/USD Technical Picture: Bias Remains Cautious

On the daily chart, NZD/USD has moved back below the middle line of the Bollinger Bands, preserving a cautious, bearish-leaning tone in the short term, even though it continues to trade above the 100-day simple moving average (SMA). Price action is clustered just above the lower Bollinger Band, suggesting consolidation rather than a decisive reversal.

The Relative Strength Index (14) stands at 43.4, a neutral reading that points to waning upside momentum without indicating strongly oversold conditions.

On the topside, the first notable barrier is located near 0.5910 at the middle Bollinger Band, with more substantial resistance seen around 0.5990 at the upper band. On the downside, initial support is aligned with the 100-day SMA at 0.5845, followed by the lower Bollinger Band at 0.5825. A break below this latter level would likely open the way for a deeper pullback within the prevailing broader downtrend.