New Zealand dollar climbs ahead of NZ Manufacturing Sales

• New Zealand Manufacturing Sales expected to improve to 0.9%
• China releases CPI on Saturday

The New Zealand dollar is in positive territory on Thursday. In the North American session, NZD/USD is trading at 0.6168, up 0.48%.

NZ manufacturing sales expected to rebound

The manufacturing sector has been in a major slump worldwide and New Zealand has not been immune. Manufacturing sales declined by 1.6% in the second quarter, after a dismal reading of -9.9% in the first quarter. The third quarter reading will be released on Friday, with an estimate of 0.9%.

New Zealand’s largest trading partner is China and the slowdown in the world’s second-largest economy could have serious ramifications for New Zealand’s economy. China’s manufacturing has been in a prolonged decline and in the services sector, growth has been modest. The slowdown has resulted in disinflationary pressures. Chinese CPI decreased 0.1% in October and another 0.1% decline is expected in the November release on Saturday. If China’s economy continues to slow, this will hurt New Zealand’s export sector and weigh on the New Zealand dollar.

The US releases nonfarm payrolls, one of the most important economic releases, on Friday. The ADP employment report isn’t considered an accurate indication of job growth but is still closely watched, as it is released just two days prior to the nonfarm payrolls report.

ADP didn’t show much change in November, dropping to 103,000 compared to a downwardly revised 106,000 in October. However, this was well below the consensus estimate of 130,000. Nonfarm payrolls are expected to rise to 180,000, after an October gain of 150,000. If the nonfarm payrolls report misses the estimate, the US dollar will likely lose ground in Friday’s North American session.

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NZD/USD Technical

• NZD/USD is testing resistance at 0.6160. Above, there is resistance at 0.6260
• There is support at 0.6111 and 0.6051

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