NZD/USD Top Performer Last Week, OIS Little Changed

NZD/USD closed down 0.16% at 0.6250 on Friday although closed the week as the best performing G10 currency. There is very little on the local calendar this week.

• The NZD/USD fell to a session low of 0.6230 following mixed US data. Technical indicators suggest potential for a near-term correction, with the RSI near 70, signaling overbought conditions, and the MACD showing weakening bullish momentum.
• New Zealand's NZD speculative net positions improved to -8.3K from -13.8K, indicating growing market confidence in the NZD. This shift reflects a more bullish outlook among traders, likely influenced by recent economic data, policy measures, or global financial conditions.
• China's August PMIs showed a continued decline in the manufacturing sector (49.1 vs 49.5 est), with factory PMI slipping further into contraction as new orders, foreign sales, and buying levels dropped for the fourth consecutive month, along with ongoing employment weakness. While the service sector (50.3 vs 50.1 est) saw a slight lift, maintaining a minor expansion, although it remains well below the levels seen from February to May.
• Initial support is now 0.6200 (Aug 27 lows) while below here 0.6146 (20-day EMA) becomes the target. Initial resistance is 0.6300 (Aug 29 highs) above here 0.6330 (Jan 1 highs).
• RBNZ dated OIS is pricing was little changed on Friday, pricing did soften over the past week with 72bps of cuts priced in this year, down from 76.5bps, while out into next year we softened 5-10bps.
• The NZ-US 2yr swap spread was 4bps lower on Friday at -14bps
• Expiries: 0.5800 ($874.48), 0.582 ($838.21m), 0.5930 ($687.86m), 0.597 ($667.76m) for Sept 3.
• The calendar is empty today