01 Nov 2024

• NZD/USD remains steady due to an unexpected increase in its largest trading partner China's factory activity.
• China’s Caixin Manufacturing PMI rose to 50.3 in October, up from September’s 49.3, surpassing the expected 49.7 reading.
• The US Dollar breaks its four-day losing streak as market caution persists ahead of upcoming US presidential election.
• NZD/USD has maintained stability for the third consecutive session, trading at approximately 0.5980 during the Asian trading hours on Friday. The New Zealand Dollar (NZD) appears to have received some support from an unexpected rise in factory activity in China, which is New Zealand's largest trading partner.
• In October, China's Caixin Manufacturing Purchasing Managers Index (PMI) increased to 50.3, up from 49.3 in September, surpassing market expectations of 49.7. Furthermore, the seasonally adjusted Building Permits data from Statistics New Zealand indicated a 2.6% month-on-month rise in new construction permits for September, following a 5.3% decrease in August.
• The Kiwi Dollar may encounter difficulties due to an increased probability of a more dovish approach from the Reserve Bank of New Zealand (RBNZ), particularly following the return of inflation to the central bank's target range. The markets have fully anticipated a 50 basis point reduction in rates for November and currently forecast a decline in the cash rate from 4.75% to 3.82% by the year's end.
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• In contrast, the US Dollar (USD) has ended its four-day decline, driven by ongoing market caution amid the uncertainty surrounding the forthcoming US presidential election. Nevertheless, the Greenback faced challenges as the US Personal Consumption Expenditures (PCE) Price Index revealed a year-over-year increase in core inflation of 2.7% for September.
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• Additionally, Initial Jobless Claims have decreased to a five-month low of 216,000 for the week ending October 25, indicating a robust labor market and diminishing expectations for immediate rate cuts by the Federal Reserve (Fed).
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• Market participants are now looking forward to the Nonfarm Payrolls (NFP) report scheduled for release on Friday. The US economy is anticipated to have added 113,000 jobs in October, with the Unemployment Rate expected to hold steady at 4.1%.