NZD/USD to Breach Below 0.5700 as Risk Stays Modest

On a risk-on impulse, the New Zealand dollar regained the 0.5700 level yesterday, which it had lost last Friday. Measures of US economic activity in the US weakening, and some readings showing that inflation in the manufacturing sector is easing, are perceived by market players as a reason for the Fed to slow its pace of tightening. So, the NZD/USD exchange rate is below 0.5700.

The Institute for Supply Management (ISM) Institute for Supply Management (ISM) found that Manufacturing PMI grew at its slowest rate in two years, going from 52.8 in August to 50.9 in September, which is a slowdown. In the same report, new orders dropped from 51 to 47.1, prices fell for the sixth month in a row.

In other news, the US Dollar Index, which shows how much the dollar is worth compared to a group of other currencies, has continued to fall as I type. It is now down 0.45%, at 111.671. Also, US Treasury bond yields went down after ISM Manufacturing numbers came out that were worse than expected and the UK’s 45% tax cut budget was changed.

Still, the NZIER Quarterly Survey of Business Opinion will release on Tuesday at around 21:00 GMT.
Rates might go up by 50 bps on Tuesday night at the Reserve Bank of Australia (RBA), which is close to New Zealand. On the US front, the calendar will show Durable Good Orders and JOLTs Jobs Openings on Tuesday, before the Nonfarm Payrolls report for September on Friday.


Near-term resistance stays at 0.5750/59 and then goes up to the 13-day exponential moving average at 0.5771, which should hold to keep the recovery from taking longer.

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