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NZD/USD moved closer to 0.6300 as the US dollar index rose above 103.60.
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A release of upbeat Caixin Manufacturing PMI at 49.0 failed to support the New Zealand dollar.
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Investors have turned cautious after the New Year celebrations and a long weekend.
The NZD/USD pair has witnessed a sell-off in the Asian session despite upbeat China’s Caixin Manufacturing PMI data. The Kiwi asset has dropped to near the round-level support of 0.6300 despite figures remaining better than expectations but lower than the former release. The release of the economic data at 49.0 vs. the projections of 48.8 might support the New Zealand Dollar ahead, being one of the leading trading partners of China.
Going forward, China’s foreign trade promotion and capital attraction status will be in focus. “China will use exchange rate policy tools to promote foreign trade, expand foreign capital stock and manage its FX reserve assets in 2023,” Pan Gongsheng, director of China’s State Administration of Foreign Exchange (SAFE), said on Tuesday.
Meanwhile, risk-averse assets are facing the heat of long weekend-inspired volatility. The risk appetite of market participants has decreased dramatically as investors are careful to build positions before the market settles. S&P500 futures witnessed modest selling pressure from market participants as investors fretted over economic prospects in CY2023.
The US Dollar Index (DXY) has climbed to near 103.50 after a recovery from the crucial support of 103.20. After the Caixin Manufacturing PMI release, investors will shift their focus toward the United States ISM Manufacturing PMI data, which will be released on Wednesday.
NZD/USD
