- Chinese PMIs decelerate
- New Zealand labour market expected to cool
The New Zealand dollar has extended its losses on Tuesday. In the North American session, NZD/USD is trading at 0.5808, down 0.60%.
October hasn’t been kind to the New Zealand dollar, which has declined by 3%. Last week NZD/USD dropped as low as 0.5772, its lowest level in a year.
New Zealand jobs employment expected to ease
New Zealand’s labour market is expected to cool in the third quarter, as elevated interest rates continue to dampen economic activity. Employment is expected to ease to 0.4% q/q, compared to 1.0% in the second quarter. The current unemployment rate of 3.6%, which was the highest since Q2 of 2021, is expected to rise to 3.9% in the third quarter.
China is New Zealand’s largest trading partner and the significant slowdown in the Chinese economy is having a dampening effect on the New Zealand economy. On Tuesday, Chinese PMIs softened in October. The Manufacturing PMI slipped from 50.2 to 49.5, missing the market consensus of 50.2. The Non-Manufacturing PMI, which covers services and construction, weakened to 50.6, down from 51.7 in September and shy of the market consensus of 51.8. A reading above 50 indicates expansion and below 50 signals contraction.
The data indicates that the world’s number two economy is still struggling to recover after removing harsh Covid-19 controls at the start of the year. China has responded with increased stimulus but more needs to be done as global demand for Chinese exports has waned and the property sector remains on shaky ground. Beijing is likely to continue lowering interest rates and increasing government spending in order to stimulate the economy.
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NZD/USD Technical
- NZD/USD is testing resistance at 0.5819. The next resistance line is 0.5864
- There is support at 0.5765 and 0.5720
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