NZ M'fing Sector Falls Into Contraction, Kiwi Stays Afloat

Two-way Fed repricing drove NZD/USD price action Thursday. The overhang of expectation-beating U.S. CPI & hawkish Fedspeak, combined with broader risk aversion, weighed on the pair in European hours. But NZD/USD rebounded over the WMR fix, as Fed's Waller & Bullard said they favour a 75bp rather than 100bp rate rise at the next meeting.

• The spillover from Australia's strong labour force survey provided some incremental support to the kiwi. As a result, the NZ dollar finished the day as one of the best G10 performers.
• NZD/USD last trades at $0.6131, little changed on the day. Should we get below yesterday's low of $0.6061, bears could take aim at the $0.6000 round figure. Conversely, a rally above Jul 8 high of $0.6207 would shift bullish focus to Jul 4 high of $0.6252.
• New Zealand's manufacturing sector plunged into contraction in June, BusinessNZ PMI survey showed, highlighting the difficulties faced by the RBNZ in its aggressive tightening campaign. Headline index printed at 49.7, falling below the 50 breakeven level for the first time since the last national lockdown in August 2021.
• China's activity data are set to grab attention today, in the absence of scheduled local risk events. Next week's docket is headlined by NZ Q2 CPI report, one of the key releases ahead of the August MPS. Monthly trade data will be eyed later in the week.