The New Zealand dollar continues to lose ground and has dropped more than 1% since Wednesday. In the European session, NZD/USD is trading at 0.6094, down 0.59%.
NZ Manufacturing PMI declines for 12th straight month
New Zealand’s manufacturing industry marked an unhappy anniversary on Friday as the sector contracted for a twelfth straight month (a PMI reading below 50 indicates contraction and above 50 indicates expansion). There was a silver lining as the BusinessNZ Manufacturing PMI improved in February for a second straight month, rising from 47.5 in January to 49.3 and beating the market estimate of 48.1.
This marked the highest level since February 2023 and raises hopes for manufacturers that there is light at the end of the tunnel. The slowdown in the New Zealand economy has dampened manufacturing activity and manufacturers reported weak demand both domestic and offshore in the February report.
It will be a busy start to next week with the release on Monday of New Zealand Services PMI and Chinese retail sales and industrial production. New Zealand’s services sector is showing signs of expansion and jumped to 52.1 in January, up from 48.8 in December. The uptrend is expected to continue in February, with a forecast of 52.9.
Chinese data often has a strong impact on the movement of the New Zealand dollar, as China is New Zealand’s largest export market. China’s retail sales is expected to fall to 5.2% y/y in January, down from 7.4% in December. Industrial production is also projected to de-accelerate to 5% in January, compared to 7.4% in December. If these key releases are weaker than expected, the New Zealand dollar could have a rough start to the week.
NZD/USD Technical
- NZD/USD has pushed below support at 0.6110 and tested support at 0.6090 earlier. Below, there is support at 0.6057
- There is resistance at 0.6143 and 0.6163
