NZD/USD slips to near 0.6300 despite better-than-anticipated Caixin Manufacturing PMI

• NZD/USD has slipped firmly to near 0.6300 as the US Dollar Index has climbed above 103.60.
• A release of the upbeat Caixin Manufacturing PMI at 49.0 has failed to support the New Zealand Dollar.
• Investors have turned cautious after the New Year celebrations and a long weekend.

The NZD/USD pair has witnessed a sell-off in the Asian session despite upbeat China’s Caixin Manufacturing PMI data. The Kiwi asset has dropped to near the round-level support of 0.6300 despite figures remaining better than expectations but lower than the former release. The release of the economic data at 49.0 vs. the projections of 48.8 might support the New Zealand Dollar ahead, being one of the leading trading partners of China.

Going forward, the status of China’s promotion of foreign trade and the capital attraction will remain in focus. China’s State Administration of Foreign Exchange (SAFE) Director Pan Gongsheng said on Tuesday, “China will use exchange rate policy tools to promote foreign trade, expand foreign capital stock and to manage its FX reserve assets in 2023,”

Meanwhile, the risk-perceived assets are facing the heat of long weekend-inspired volatility. The risk appetite of the market participants has trimmed dramatically as investors are cautionary in making positions before settling in the market. S&P500 futures have witnessed decent selling pressure from the market participants as investors are concerned above economic prospects in CY2023.

The US Dollar Index (DXY) has climbed to near 103.50 after a recovery move from the crucial support of 103.20. After the release of the Caixin Manufacturing PMI, investors will shift their focus toward the United States ISM Manufacturing PMI data, which will release on Wednesday.