NZD Slides as Chinese PMI Data Undermines Risk Sentiment

Key Moments

NZD Under Pressure After Chinese PMI Releases

NZD/USD continues to move lower for the second consecutive day, changing hands near 0.5620 during Monday’s Asian session. The New Zealand Dollar remains on the back foot after fresh activity data from China, a key trading partner for New Zealand.

RatingDog’s Manufacturing Purchasing Managers’ Index for China slipped to 52.0 in September from 52.1 in August, though it still exceeded the market expectation of 51.6. The softer reading has weighed on sentiment toward growth-sensitive currencies such as the NZD.

Official Chinese PMIs Signal Slowing Momentum

Additional pressure on the NZD stems from the latest figures released by China’s National Bureau of Statistics (NBS). On Saturday, NBS reported that the Manufacturing PMI fell to 49.3 in October, down from 50.1 previously and below the market consensus of 50.0.

The survey for the services and construction sectors also weakened, with the NBS Non-Manufacturing PMI dropping to 49.7 in October compared with 50.2 in September. These readings highlight a loss of momentum across both factory and non-manufacturing activity, dampening demand for currencies tied to global growth.

Dollar Softens on Risk Sentiment, But Fed Expectations Lend Support

Downside in NZD/USD may be partly cushioned as the US Dollar struggles to attract safe-haven flows. Easing risk aversion is being driven by diplomatic initiatives aimed at resolving the Middle East conflict, even as concerns remain about possible renewed US military action against Iran.

Qatari and Iranian officials have continued negotiations for a third straight day, seeking to secure an agreement to end the war ahead of the US midterm elections. These efforts have tempered some of the demand for the USD as a haven asset.

At the same time, the greenback could find renewed backing from interest rate expectations. Based on the CME FedWatch Tool, market participants are assigning roughly a 75% probability to a Federal Reserve rate hike in December. This view is supported by recent US economic data that point to ongoing strength and sticky inflation pressures.

Key US Data and Fed Speak in Focus

Market participants are now looking ahead to several upcoming US indicators and policy signals. The calendar features the US Nonfarm Payrolls report, as well as the ISM manufacturing and services surveys.

Comments from a number of Federal Reserve officials scheduled throughout the week are also expected to provide further insight into the potential path of monetary policy and may influence USD direction and NZD/USD positioning.

Technical Backdrop: NZD/USD Holds Bearish Tone Below EMAs

On the daily chart, NZD/USD is trading at 0.5620 and maintains a negative bias as spot remains below both the short-term nine-period Exponential Moving Average and the medium-term 50-period EMA. This configuration leaves the pair constrained by layered resistance overhead.

Momentum indicators are consistent with that view. The 14-day Relative Strength Index has slipped below the midpoint to around 40, suggesting that recent corrective bounces have lacked follow-through, even as the broader FXS Fed Sentiment Index has shown some stabilization.

On the upside, the first resistance level is seen at the nine-period EMA near 0.5644. A more substantial barrier is located at the 50-period EMA around 0.5701. Together, these moving averages are currently limiting recovery attempts. With clear downside reference points not available from the provided data, traders may continue to sell into rallies toward this EMA band, as the existing pattern points to further downside risk unless NZD/USD can recapture and sustain levels above these averages.