USD to NZD Rate Set to Break Support at 0.5850 As China Economy Shows Signs of Life

The USD to NZD rate continues to remain volatile, returning to the support zone around 0.5850s which has been the low for 2024, rejecting the price twice.

Throughout the year, the NZD/USD has traded within a narrow five-cent range. After the pair failed to break through the upper resistance between 0.6370 and 0.6380, the outlook turned bearish, especially after last month’s unsuccessful attempt to hold above 0.60 and the subsequent drop below 0.59.

Recent Pressures Post-U.S. Election

Following the U.S. presidential election, the NZD/USD pair made a brief recovery attempt after a sharp four-cent drop in October that brought it below the 0.60 level. However, the failed Chinese economic stimulus measures dampened market sentiment and further pressured risk-sensitive currencies like the New Zealand dollar.

NZD/USD Chart Daily Bouncing Between Support and Resistance Levels

For sellers to continue pushing lower, the pair would need to break through the 0.5850 support level, opening the path toward the 0.5770 mark, a significant low from 2023. The Reserve Bank of New Zealand’s (RBNZ) shift to a dovish stance, combined with weak economic data from both New Zealand and China, limits optimism for NZD buyers.

New Zealand Economic Indicators Impacting the NZD

The NZD/USD outlook remains challenging, with technical barriers and lackluster economic data making a sustained recovery difficult. Lower inflation expectations and higher unemployment point to reduced inflationary pressures, reinforcing the RBNZ’s dovish stance and increasing the likelihood of continued weakness in the currency.

• Inflation Expectations: The latest data showed a decrease in 1-Year Inflation Expectations to 2.05%, down from 2.4% last quarter, signaling reduced short-term inflationary pressures.
• Unemployment Rate: New Zealand’s Q3 jobs report indicated a rise in the unemployment rate from 4.6% to 4.8%, further justifying a dovish approach from the RBNZ.

Chinese Retail Sales and Industrial Production for October

China Retail Sales (YoY, October)

• Actual: 4.8%
• Expected: 3.8%
• Prior month: 3.2%
• Observation: Retail sales growth exceeded expectations, indicating strong consumer demand.

China Industrial Production (YoY, October)

• Actual: 5.3%
• Expected: 5.6%
• Prior month: 5.4%
• Observation: Industrial production growth was slightly below expectations and decelerated compared to the prior month, suggesting possible headwinds in manufacturing output.

China Unemployment Rate (October)

• Actual: 5.0%
• Expected: 5.1%
• Prior month: 5.1%
• Observation: The unemployment rate improved slightly, signaling a stable labor market.

NZD/USD Live Chart