New Zealand Dollar weakens following China’s RatingDog Manufacturing PMI data

• New Zealand Dollar holds losses after China’s RatingDog Manufacturing PMI eased to 52.0 in September from 52.1 in August.
• China’s NBS Manufacturing PMI fell into contraction territory at 49.3 in October, missing expectations of 50.0.
• US Dollar could receive support from robust US economic data and high Fed rate hike expectations.

NZD/USD extends its losses for the second successive day, trading around 0.5620 during Asian hours on Monday. The pair depreciates as the New Zealand Dollar (NZD) remains subdued following the release of RatingDog Manufacturing Purchasing Managers' Index (PMI) data from China, New Zealand’s close trading partner, which eased to 52.0 in September from 52.1 in August. The market forecast was for a 51.6 reading.

China’s National Bureau of Statistics (NBS) reported on Saturday that Manufacturing PMI dropped to 49.3 in October, compared to 50.1 in the previous reading. The reading came in below the market consensus of 50.0 in the reported month. Additionally, the NBS Non-Manufacturing PMI declined to 49.7 in October versus September’s 50.2 figure.

The downside of the NZD/USD pair could be restrained as the US Dollar (USD) struggles due to easing safe-haven demand, driven by ongoing diplomatic efforts to end the Middle East conflict despite lingering fears of renewed US military action against Iran. Qatari and Iranian officials continued discussions for a third consecutive day, working toward an agreement to end the war ahead of the US midterm elections.

However, the US Dollar could regain ground on rising expectations for a Federal Reserve rate hike. According to the CME FedWatch Tool, traders are pricing in roughly a 75% chance of a December rate increase, boosted by recent US macroeconomic data pointing to economic resilience and persistent inflation.

Traders await key upcoming events, including the US Nonfarm Payrolls (NFP) report and ISM manufacturing and services data. Remarks from several Federal Reserve officials scheduled throughout the week are also expected to offer further guidance on the central bank's monetary policy path.

Technical Analysis: NZD/USD remains below nine-day EMA

In the daily chart, NZD/USD trades at 0.5620, keeping a bearish bias as spot holds below both the short-term nine-period Exponential Moving Average (EMA) and the medium-term 50-period EMA. The pair remains pressured by this stacked overhead resistance, while the 14-day Relative Strength Index (RSI) slips below the midline near 40, hinting that recent rebounds lack momentum despite some stabilization in the broader FXS Fed Sentiment Index.

On the topside, initial resistance is located at the nine-period EMA around 0.5644, with a stronger barrier at the 50-period EMA near 0.5701, which together cap any recovery attempts for now. With no clear technical support levels derived from the present dataset, traders may continue to fade upticks towards the EMA cluster, as the prevailing structure suggests further downside risk unless NZD/USD can reclaim and hold above these moving averages.

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