NZD/USD steadies near three-week low past 0.6100 on mixed China PMIs, cautious mood ahead of US PCE Inflation

• NZD/USD remains sidelined at the lowest levels in three weeks, prods three-day downtrend.
• China PMIs for June came in mixed but cautious optimism prods Kiwi bears.
• Upbeat prints of New Zealand’s ANZ Roy Morgan Consumer Confidence also prod Kiwi bears.
• Fed’s favorite inflation gauge, risk catalysts eyed for clear directions.

NZD/USD bears take a breather near the multi-day low as mixed data from China joins upbeat economic signals at home to prod further downside during early Friday. Also challenging the Kiwi bears is the cautious mood ahead of the key US inflation gauge. That said, the Kiwi pair picks up bids to 0.6075 as it prints the first daily gain, of 0.05% intraday at the latest, in four as we write.

China’s headline NBS Manufacturing PMI matches 49.0 market forecasts in June versus 48.8 expected while the Non-Manufacturing PMI rose past 50.2 analysts’ estimations to 53.2, compared to 54.5 previous readings, during the said month.

On the other hand, New Zealand’s ANZ – Roy Morgan Consumer Confidence for June jumped to 85.5 versus 79.2 prior release.

It’s worth noting that the early-week disappointment from Australia’s inflation data contrasts with the Pacific major’s upbeat Retail Sales to also prod the NZD/USD bears, due to Auckland’s ties with Canberra.

Even so, hawkish Federal Reserve (Fed) comments and upbeat US data keep the US Dollar firmer and exert downside pressure on the Kiwi pair amid a light calendar at home and fears of the Reserve Bank of New Zealand’s (RBNZ) pause in rate hike.

During the week, Fed Chair Jerome Powell advocated for two more rate hikes in 2023 while Atlanta Federal Reserve President Raphael Bostic flashed mixed signals but stayed hawkish overall. Talking about the US data, the final readings of the Gross Domestic Product (GDP) Annualized, mostly known as the Real GDP, grew at the 2.0% rate for the first quarter (Q1) of 2023 versus the 1.3% initial estimation. Further, the US Weekly Initial Jobless Claims slumped to 239K for the week ended on June 23 compared to 265K expected and revised prior. However, the Personal Consumption Expenditure (PCE) Price for Q1 2023 eased to 4.1% QoQ from 4.2% expected and prior whereas the Pending Home Sales slumped to -2.7% MoM for May compared to 0.2% expected and -0.4% prior (revised).

Amid these plays, the markets remain dicey after witnessing an upbeat day, which in turn challenges the NZD/USD traders ahead of the Federal Reserve’s (Fed) favorite inflation gauge, namely the US Core Personal Consumption Expenditure (PCE) Price Index, for May.

Technical analysis

The oversold RSI (14) line and the receding bearish bias of the MACD signals prod the NZD/USD bears of late. However, the Kiwi pair’s sustained downside break of the monthly support line, 100-SMA and a two-week-old bearish channel keeps the sellers hopeful. Hence, a horizontal area comprising multiple levels marked since late May, around 0.6030, can allow the NZD/USD prices to consolidate before marking the fresh leg towards the south.