Why is the New Zealand Dollar weakening after China’s RatingDog Manufacturing PMI data?

• The New Zealand Dollar remains under pressure after China’s RatingDog Manufacturing PMI slipped from 52.1 in August to 52.0 in September.
• An October reading of 49.3 put China’s NBS Manufacturing PMI in contraction, below the expected 50.0.
• Strong US economic readings and elevated expectations of a Fed rate hike could underpin the US Dollar.

Selling pressure persists in NZD/USD, with the pair hovering near 0.5620 in Monday’s Asian session as losses extend into a second consecutive day. The New Zealand Dollar (NZD) remains weak after the RatingDog Manufacturing Purchasing Managers’ Index (PMI) release from China, a close trading partner of New Zealand. The index edged down from 52.1 in August to 52.0 in September, against a market forecast of 51.6.

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. This was below the market consensus of 50.0 for the month. The NBS Non-Manufacturing PMI also weakened, moving from September’s 50.2 to 49.7 in October.

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

Rising expectations of a Federal Reserve rate hike could, however, help the US Dollar recover. Recent US macroeconomic releases indicating a resilient economy and persistent inflation have strengthened those expectations. According to the CME FedWatch Tool, traders now assign roughly a 75% probability to a rate increase in December.

Among the key releases traders are awaiting are the US Nonfarm Payrolls (NFP) report and the ISM manufacturing and services data. Several Federal Reserve officials are also due to speak during the week, with their remarks expected to provide additional direction on the central bank’s monetary policy outlook.

Technical Analysis: Can NZD/USD Recover Above the Nine-Day EMA?

A bearish bias persists on the daily chart, where NZD/USD is trading at 0.5620 beneath both the short-term nine-period Exponential Moving Average (EMA) and the medium-term 50-period EMA. These successive overhead resistance levels continue to weigh on the pair. Meanwhile, the 14-day Relative Strength Index (RSI) has slipped below its midline to near 40, suggesting recent rebounds lack momentum, even as the broader FXS Fed Sentiment Index shows some stabilisation.

Any recovery first faces resistance around 0.5644 at the nine-period EMA, followed by a firmer hurdle near 0.5701 at the 50-period EMA. Together, these averages are limiting recovery attempts for now. The available dataset does not identify clear technical support levels. Traders may therefore continue selling into upticks towards the EMA cluster, with the prevailing structure pointing to further downside risk unless NZD/USD recovers above these moving averages and sustains that position.

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