The New Zealand dollar is in negative territory for a second straight day. In the European session, NZD/USD is trading at 0.6778, down 0.23% on the day.
Soft manufacturing data weighs on NZD
This week’s New Zealand manufacturing data pointed to weaker growth in the manufacturing sector. Manufacturing Sales fell -2.2% in Q3, after two quarters of growth. The markets had forecast a strong gain of 4.2%. This was followed by the Manufacturing PMI for November, which slowed to 50.6, which indicates stagnation. The PMI fell from 54.2 in October. Manufacturing continues to be hampered by supply shortages, which could make for soft manufacturing numbers in the fourth quarter.
US CPI projected to hit 7.0%
All eyes will be on today’s US inflation report for November. The consensus is that CPI will accelerate to 7.0% y/y, which would be up from the October rate of 6.2%. If CPI hits the 7-mark or higher, it would reinforce expectations that the Fed will double its taper at the January meeting to USD 30 billion/mth. This means that the Fed’s bond purchase programme would end in March instead of June, and would allow the Fed to begin raising rates early in the second quarter. This would be bullish for the US dollar.
The Fed is not the only one worried about soaring inflation. President Biden is feeling the heat from hot inflation in his popularity numbers, as unhappy consumers look for someone to blame for rising prices. Biden recently took aim at the oil companies for gouging customers at the gas pump, but there’s little the President can do to keep gas prices down, as he found out when his order to release oil from the Strategic Petroleum Reserve failed to make a dent in high oil prices.
- There is resistance at 0.6829 and 0.6912
- NZD/USD has support at 0.6703, protecting the 67 level. Below, there is support at 0.6660
Written by Admin
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