- New Zealand business confidence rises
- ADP Employment Change falls to 177,000
- There is support at 0.5927 and 0.5866
- 0.5968 is a weak resistance line. Above, there is resistance at 0.6029
NZD/USD is almost flat on Thursday, trading at 0.5958 in Europe.
New Zealand Business Confidence improves again
New Zealand’s ANZ Business Confidence index accelerated for a fourth straight month in August. The index improved to -3.7, up from -13.1 in July. Business Confidence has been in negative territory for 26 consecutive months, but the August print was the highest since June 2021. The consensus estimate stood at -1.9 and the New Zealand dollar didn’t react. If the upswing continues, we should see a positive reading in the next month or two, which would be a milestone and likely give a boost to the New Zealand dollar.
The business confidence report noted that inflation expectations dipped very slightly, from 5.14% to 5.06%. This is clearly incompatible with a 2% inflation target but the key question is whether the Reserve Bank of New Zealand will pause for a third straight time in October, in the hope that the benchmark rate of 5.50% will further cool the economy and push inflation lower.
The RBNZ doesn’t meet until October 4th, with only one tier-1 event prior to the meeting, which is GDP on September 20th. The central bank will also be keeping a close eye on events in China, where the economy has been deteriorating. On Thursday, China’s Manufacturing PMI rose in July to 49.7, up from 49.3 in June, but this marked a fifth straight contraction.
In the US, the markets await the non-farm payrolls release on Friday. The ADP employment report fell sharply to 177,000, down from an upwardly revised 371,000 and shy of the estimate of 195,000. The ADP release isn’t a reliable precursor to non-farm payrolls but still attracts attention as investors hunt for clues ahead of the non-farm payrolls release. The markets are expecting non-farm payrolls to fall to 170,000 in August, compared to 187,000 in July.
