The New Zealand dollar has started the new trading week with strong gains, up 0.55% today, trading at 0.6191 in the European session.
NZ Services PMI Improves
New Zealand’s services sector showed a bit of positive news today as the services PMI improved to 45.5 in August, up from an upwardly revised 45.2 in July. This was its highest level since April. Additionally, New Zealand’s manufacturing PMI also improved, rising in August from an upwardly revised 44.4 to 45.8, although shy of the forecast of 47.0.
While both services and manufacturing sectors remain in contraction territory, the acceleration in August and the upward revisions from the previous month indicate some positive momentum in the New Zealand economy.
The Reserve Bank of New Zealand joined the rate-cutting club last month, lowering rates by 25 basis points to 5.25%. With GDP growth down to 3.3%, the central bank has initiated a rate-cut cycle to stimulate weak economic activity.
The RBNZ is set to meet next on October 9, and the upcoming second-quarter GDP data release on Thursday will be a critical event to watch. Market expectations are grim, with the economy anticipated to have contracted in the second quarter (-0.4% q/q and 0.5% y/y) following modest gains in the first quarter. A contraction in Q2 GDP could further pressure the RBNZ to consider lowering rates at the next meeting.
NZD/USD Technical Analysis
- NZD/USD is currently putting pressure on resistance at 0.6199, with further resistance at 0.6240
- Support levels are seen at 0.6153 and 0.6112