The New Zealand dollar is lower on Monday. In the European session, NZD/USD is trading at 0.6082, down 0.44%.
Services PMI contracts for seventh straight month
New Zealand’s economy has been struggling, and a key factor has been the contraction in the services sector. The services PMI remained steady in September at 45.7 following an upward revision in August. The PMI has now been stuck in contraction for seven straight months, with readings below the neutral 50 level.
The Reserve Bank of New Zealand chopped interest rates by 50 basis points last week, as the weak economy is in danger of tipping into a recession due to elevated rates. The RBNZ has been hawkish and even warned at recent meetings about possibly raising rates, but pivoted sharply in delivering an oversized cut.
The RBNZ had projected that it would not start lowering rates until mid-2025 but the weak economy and falling inflation were the drivers behind the rate cut. New Zealand releases third-quarter inflation on Tuesday with a market estimate of 2.3% y/y, compared to 3.3% in the second quarter.
Lower inflation is welcome news for the RBNZ, but weak inflation in China is not. In September, inflation dropped to 0.4% y/y, down from 0.6% in August and below the market estimate of 0.6%. Monthly, inflation eased to 0.0%, down from 0.4% and below the market estimate of 0.4%. Core CPI rose only 0.1%, its lowest level since February 2021.
China has a deflation problem, which could result in weaker economic growth and higher unemployment. That would dampen consumer demand and New Zealand would feel the pinch, as China is New Zealand’s largest export market.
NZD/USD technical
-
NZD/USD has support at 0.6051 and 0.5991.
-
There is resistance at 0.6112 and 0.6172.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
Gold hovers around all-time highs near $3,250
Gold is holding steady near the $3,250 mark, fuelled by robust safe-haven demand, trade war concerns, and a softer-than-expected US inflation gauge. The US Dollar keeps trading with heavy losses around three-year lows.
EUR/USD retreats towards 1.1300 as Wall Street shrugs off trade war headlines
The EUR/USD pair retreated further from its recent multi-month peak at 1.1473 and trades around the 1.1300 mark. Wall Street manages to advance ahead of the weekly close, despite escalating tensions between Washington and Beijing and mounting fears of a US recession. Profit-taking ahead of the close also weighs on the pair.
GBP/USD trims gains, recedes to the 1.3050 zone
GBP/USD now gives away part of the earlier advance to fresh highs near 1.3150. Meanwhile, the US Dollar remains offered amid escalating China-US trade tensions, recession fears in the US, and softer-than-expected US Producer Price data.
Bitcoin, Ethereum, Dogecoin and Cardano stabilze – Why crypto is in limbo
Bitcoin, Ethereum, Dogecoin and Cardano stabilize on Friday as crypto market capitalization steadies around $2.69 trillion. Crypto traders are recovering from the swing in token prices and the Monday bloodbath.
Is a recession looming?
Wall Street skyrockets after Trump announces tariff delay. But gains remain limited as Trade War with China continues. Recession odds have eased, but investors remain fearful. The worst may not be over, deeper market wounds still possible.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.