New Zealand Dollar declines after China’s RatingDog Manufacturing PMI release

• China’s RatingDog Manufacturing PMI slipped from 52.1 in August to 52.0 in September, leaving the New Zealand Dollar nursing losses.
• At 49.3 in October, China’s NBS Manufacturing PMI moved into contraction, falling short of the 50.0 forecast.
• Resilient US economic figures and strong expectations of a Fed rate rise could underpin the US Dollar.

China’s RatingDog Manufacturing Purchasing Managers’ Index (PMI) edged down to 52.0 in September from 52.1 in August, against a market forecast of 51.6. The release from New Zealand’s close trading partner leaves the New Zealand Dollar (NZD) under pressure. NZD/USD is consequently lower for a second consecutive day, changing hands near 0.5620 in Monday’s Asian session.

Figures released on Saturday by China’s National Bureau of Statistics (NBS) showed the Manufacturing PMI falling from 50.1 in the previous reading to 49.3 in October. That was below the market consensus of 50.0 for the month. The NBS Non-Manufacturing PMI also weakened, dropping to 49.7 in October from September’s 50.2.

Further losses in NZD/USD could be limited by a struggling US Dollar (USD), as diplomatic efforts to resolve the Middle East conflict reduce demand for safe havens. This comes despite continued concern over renewed US military action against Iran. For a third consecutive day, Qatari and Iranian officials held talks aimed at securing an agreement to end the war before the US midterm elections.

Growing expectations of a Federal Reserve rate rise could, however, help the US Dollar recover. The CME FedWatch Tool puts traders’ pricing at roughly a 75% probability of a December increase. Recent US macroeconomic releases indicating a resilient economy and persistent inflation have reinforced those expectations.

Attention now turns to forthcoming releases, notably the US Nonfarm Payrolls (NFP) report and the ISM manufacturing and services figures. Several Federal Reserve officials are also due to speak during the week, with their comments expected to provide further indications of the central bank’s monetary policy trajectory.

Technical Analysis: NZD/USD stays under pressure below nine-day EMA

Trading at 0.5620 on the daily chart, NZD/USD retains a bearish bias beneath both the short-term nine-period Exponential Moving Average (EMA) and the medium-term 50-period EMA. These successive layers of overhead resistance continue to weigh on the pair. Meanwhile, the 14-day Relative Strength Index (RSI) has slipped below its midline to near 40, suggesting recent recoveries have lacked momentum even as the broader FXS Fed Sentiment Index shows some stabilisation.

The nine-period EMA at around 0.5644 provides the first upside hurdle, followed by firmer resistance at the 50-period EMA near 0.5701. Together, these levels are restraining recovery attempts for the time being. The available dataset provides no clear technical support levels, so traders may continue selling into rallies towards the EMA cluster. The prevailing structure points to further downside risk unless NZD/USD moves back above these moving averages and holds there.

(The technical analysis of this story was written with the help of an AI tool. Know more.)