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New Zealand dollar eyes Chinese economic data as APAC markets prep for risk-off move

Asia-Pacific stocks aimed lower after a downbeat trading session in New York and Chinese manufacturing PMI may reverse sentiment if the data surprises to the upside.

Wednesday’s Asia-Pacific outlook

A downbeat New York trading session that saw US stock indexes decline for the third day will likely weigh on Asia-Pacific equity markets today. The tech-heavy Nasdaq-100 Index (NDX) fell 1.13%, while the benchmark S&P 500 closed 1.10% lower. A rebound in US consumer confidence, according to the Conference Board’s August survey, and rosy US labor market data hardened Federal Reserve rate hike bets.

However, Chinese economic data may sway market sentiment across the APAC region. China’s National Bureau of Statistics (NBS) is set to report purchasing managers’ index (PMI) data for August at 01:30 GMT. Analysts expect a slight increase to 49.2 from 49.0, although that would still leave the country’s manufacturing sector in contraction with the reading under 50. That said, a surprise beat, especially if above the 50 contraction/expansion mark, would provide a tailwind for market sentiment.

New Zealand released its own economic data this morning, with the July data for building permits. Building permits for last month increased 5% at a month-over-month pace. The Reserve Bank of New Zealand’s (RBNZ) aggressive rate hiking scheme has suppressed the Kiwi housing market, which already had historically elevated prices.

Japan is also set to release industrial production, housing starts, and retail sales data, all for July this morning. NZD/USD may also move on consumer confidence data for New Zealand in August from ANZ. Bank of Japan board member Nakagawa Junko is due to speak today, but that will likely have little influence on the Japanese Yen. Traders also have their sights set on second-quarter GDP data out of India.

NZD/USD technical outlook

NZD/USD is tracking towards its 2022 low at 0.6060, which was set back in July. The falling 9-day Exponential moving Average (pink line) has pressured prices over the last several week, and the pair is tracking below its major Simple Moving Averages (20-, 50-, 100- and 200-day SMAs). The path of least resistance and trend puts a bearish tilt on NZD/USD’s near-term outlook.

NZD/USD daily chart

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