NZD/USD finds support near 0.5900 ahead of key US data
- NZD fails to capitalize on upbeat PMI data from China.
- US Dollar Index climbs higher toward 100 on risk aversion.
- Coming up: ADP Employment Change, ISM Manufacturing PMI data from US.
The NZD/USD broke below the 0.6000 handle on Tuesday and closed the day around mid-0.5900s before extending its slide on Wednesday. As of writing, the pair was trading at 0.5906, erasing 0.8% on a daily basis.
Although the data from China revealed that the economic activity in the manufacturing sector expanded at a modest pace in March with the Caixin PMI improving to 50.1 from 40.3 in February, the NZD failed to capitalize on this data.
The risk-off atmosphere amid the surging number of confirmed coronavirus infections and fatalities worldwide seems to be making it difficult for the risk-sensitive kiwi to find demand. Reflecting the dismal mood, major European equity indexes are erasing more than 3% on the first day of the second quarter.
Focus shifts to US data
Meanwhile, the greenback is preserving its strength with the US Dollar Index posting decisive gains above the 99.50 mark on Wednesday. In the second half of the day, the ADP Employment Change data and the ISM's Manufacturing PMI, which is expected to drop to 45 in March from 50.1 in February will be looked upon for fresh impetus.
Previewing the ISM report, “March ISM data are likely to portray an economy plunging into recession, even with many of the responses to the survey largely reflecting activity in the first half of the month,” said TD Securities analysts.
Technical levels to watch for