- NZD/USD rises above 0.5650 following China’s pledge to boost private consumption, sparking optimism in global markets.
- Investors are awaiting China’s official business activity data for December, which could further influence market sentiment.
- The Reserve Bank of New Zealand (RBNZ) is expected to cut interest rates by 50 basis points in February, which may weigh on the Kiwi Dollar’s outlook.
The NZD/USD pair rises to near 0.5660 in Monday’s European session, driven by a sharp gain following China’s announcement of measures to boost private consumption. The Chinese government plans to offer handouts to those struggling with the cost of living and provide additional benefits to unemployed individuals, as reported by Xinhua News Agency.
Investors will focus on China’s upcoming Manufacturing and Non-Manufacturing PMI data for December, scheduled for release on Tuesday. Expectations are for the Manufacturing PMI to show steady expansion at 50.3, with Non-Manufacturing PMI slightly improving to 50.2. Given New Zealand’s close trade ties with China, these economic figures are particularly relevant for the Kiwi.
However, the broader outlook for the NZD remains weak, with markets anticipating a 50 basis point rate cut from the Reserve Bank of New Zealand (RBNZ) in its February meeting, which could further pressure the currency. Meanwhile, the US Dollar weakens ahead of the New Year, with the US Dollar Index (DXY) falling to 107.85.
On the technical side, NZD/USD finds temporary support around the two-year low of 0.5520 on the weekly chart. The bearish trend persists, with the 20-week Exponential Moving Average (EMA) capping any potential rallies near 0.5900. The 14-week Relative Strength Index (RSI) dips near 30.00, indicating strong downward momentum. A break below the 0.5500 support could see the pair fall to the 13-year low of 0.5470 and potentially 0.5400. Conversely, a breakout above the November 29 high of 0.5930 could push the pair toward the 0.5970 and 0.6000 levels.
NZD/USD weekly chart
