NZD/USD seesaws around weekly high on NFP day, eyes on China Caixin PMI for now
- NZD/USD benefits from USD weakness, receding odds of November rate cut.
- US-China trade deal sentiment worsens, NZ Consumer Confidence bounces.
- China’s private activity numbers, US monthly employment statistics in the spotlight.
Despite receding odds of any longer trade relations between the US and China beyond the phase one deal, NZD/USD stays firm around more than a week’s high as the broad USD weakness and declining expectations of November rate cut from RBNZ favor the bulls. The quote takes the round to 0.6415 at the start of Friday’s Asian trading session.
While the United States (US) Federal Reserve’s (Fed) third straight rate cut set the tone for the US Dollar’s (USD) initial run down against most of its counterparts, trade pessimism and mixed data in the US propelled greenback weakness on Thursday.
The US and Chinese diplomats’ optimism to find a place to sign the phase one deal, despite the cancellation of next month’s Asia-Pacific Economic Cooperation (APEC) summit in Chile, failed to please trade bulls as policymakers at China seem less optimistic about any longer trade relations with the US than the phase one. On the other hand, the Trump administration keeps flashing mixed signals but failed to renew market optimism.
Among the data, downbeat readings of the Personal Consumption Expenditure (PCE) Price Index grabbed sellers’ attention.
Also adding to the Kiwi’s strength is the recent increase in expectations that the Reserve Bank of New Zealand (RBNZ) will wait for another rate cut till February rather than previously anticipated November deadline.
The latest positive for the pair comes from the Australia and New Zealand Banking Group (ANZ) as the ANZ-Roy Morgan Consumer Confidence for October reversed September’s fall of 4 points to 118. “The Current Conditions Index rose 2 points, while the Future Conditions Index rose 6 points. Both indexes reversed last month’s moves. The proportion of households who think it’s a good time to buy a major household item fell 5 points to 36%, back where it was late last year,” says ANZ.
Investors will now focus mainly on China’s private manufacturing activity numbers, namely Caixin Manufacturing Purchasing Managers Index (PMI) for October after the official data flashed sluggish data the previous day. Forecasts suggest the reading to be soft at 51.0 from 51.4. However, the overall market attention will remain on the US October month employment statistics, up for publishing late in the day, with a major focus on the headlines Nonfarm Payrolls (NFP).
Technical Analysis
A seven-week-old falling trend line at 0.6435 seems emerging as the key immediate upside barrier ahead of September month high of 0.6452 and 0.6500 round figure. On the downside, sellers will wait for 0.6380 and 0.6350 to return to charts.