NZD/USD edges lower ahead of NZ Manufacturing PMI

• US retail sales, PPI accelerates
• New Zealand to release Manufacturing PMI on Friday
• China to release retail sales and industrial production on Friday

The New Zealand dollar is in negative territory on Thursday. NZD/USD is trading at 0.5904 in the North American session, up 0.12%.

Markets eye Manufacturing PMI, Chinese data

New Zealand releases the Manufacturing PMI on Friday. Manufacturing across the globe has been hard-hit by weak demand and New Zealand has not been immune. The Manufacturing PMI has contracted for five straight months, falling from 47.5 to 46.3 in July. The downswing is expected to continue, with a forecast of 46.0 for August.

The markets will also be keeping an eye on Chinese releases on Friday. China is New Zealand’s largest trading partner and weak Chinese data has weighed on the New Zealand dollar, which plunged 3.90% against the US dollar in August. Chinese retail sales are expected to rise in August from 2.5% to 3.0%, and industrial production is projected to rise to 3.9% in August, up from 3.7% in July. If China’s numbers improve, it could provide a boost for the New Zealand dollar.

US posts strong retail sales, PPI

US retail sales climbed in August to 0.6% m/m, higher than the consensus estimate of 0.2% and a notch higher than the 0.5% gain in July. The main factor behind the upswing was gasoline prices, which jumped over 10% in August (that increase was a key factor in headline inflation rising in August).

Producer prices followed the pattern of the August CPI data, with the headline reading rising while the core rate declined. PPI climbed 0.7% in August, higher than the July read of 0.4% and the market consensus of 0.3%. Core PPI dropped to 0.2%, down from a revised 0.4% in June and matching the consensus estimate. On an annualized basis, headline PPI rose from 0.8% to 1.6% (1.2% est.) while the core rate dropped from 2.4% to 2.2% (2.2% est.).

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NZD/USD Technical

• NZD/USD tested resistance at 0.5944 but has retreated. The next resistance line is 0.6003
• There is support at 0.5901 and 0.5842

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