NZD/USD: Bulls rescued by better China PMI, 0.6900 back on sight?
- NZD is the weakest currency in Asia.
- Upbeat China manufacturing data offset by awful NZ business confidence?
- On track for the second straight monthly loss.
The offered tone around the NZD weakened slightly, following the release of better-than-expected Chinese manufacturing PMI report, taking the NZD/USD pair away from the six-day lows of 0.6834 levels.
NZD/USD: Shorts-squeeze short-lived
The spot extends its retreat from almost 2-week tops of 0.6946 into a third day today, with the position-related shorts-squeeze short-lived, as NZ economic fundamentals continued to drive the sentiment around the Kiwi.
As for today’s trading so far, the Kiwi was dumped across the board after New Zealand’s business confidence numbers, as reported by ANZ, came in at 39.3 for Oct. vs -10.1 last month. Political uncertainty combined with concerns over slowing NZ housing markets also added to the weight on the local currency.
However, the sell-off in the major appears to have stalled, as the bulls find the much-needed respite from upbeat China’s manufacturing sector activity report that showed the manufacturing PMI rose to the highest since September.
Moreover, broad-based US dollar weakness also offered some support to the NZD/USD pair, as the USD bulls failed to benefit from yesterday’s upbeat US GDP numbers and Yellen’s hawkish comments.
However, it remains to be seen if the major can regain the 50-DMA barrier ahead of the RBNZ FSR due out later on Tuesday. In the meantime, the broader market sentiment will drive the pair, in absence of first-tier US macro releases.
NZD/USD Levels to consider
The spot finds support at 0.6811 (classic S3), below which 0.6780 (multi-month lows) and 0.6700 (round number) are key near-term downside areas. To the topside, a break above 0.6883/80 (5 & 20-DMA) could open doors towards 0.6954 (50-DMA).