NZ Dollar Falls As China Manufacturing Activity Shrinks

(RTTNews) - The New Zealand dollar weakened against other major currencies in the Asian session on Friday, after data showed that China's manufacturing sector contraction deepened in October.

Data from the National Bureau of Statistics showed that the China factory PMI fell more-than-expected to 49.0 in October from 49.8 in September. A reading below 50.0 indicates contraction. The score was seen at 49.6.

Meanwhile, the non-manufacturing PMI edged up to 50.1 from 50.0 in the previous month. The reading came in line with expectations.

As a result, the composite indicator that tracks both the manufacturing and services sectors, slid to 50.0 in October from 50.6 in the prior month.

Furthermore, the New Zealand Dollar (NZD) is weakened by the Reserve Bank of New Zealand's (RBNZ) dovish stance.

Meanwhile, Asian shares traded mixed amid renewed uncertainty about the outlook for interest rates after Fed Chair Jerome Powell said a further reduction in rates in December is "not a foregone conclusion. Seemingly positive developments out of US President Donald Trump's highly anticipated meeting with his Chinese counterpart Xi Jinping is aiding market sentiment.

CME Group's FedWatch Tool is currently indicating a 72.8 percent chance the Fed will lower rates by another quarter point in December, down from 91.1 percent a week ago.

The U.S. has agreed to reduce fentanyl-linked tariffs on China to 10 percent from 20 percent, while China has agreed to resume purchases of U.S. soybeans. China will also suspend the implementation of new export controls on rare earths, and in return, the U.S. will suspend its 50 percent penetration rule on export controls.

In the Asian trading today, the NZ dollar fell to a 3-day low of 2.0207 against the euro, from yesterday's closing value of 2.0144. The kiwi may test support near the 2.05 region.

Against the U.S. and the Australian dollars, the kiwi slid to an 8-day low of 0.5725 and more than a 3-week low of 1.1434 from Thursday's closing quotes of 0.5744 and 1.1419, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.56 against the greenback and 1.15 against the aussie.

The kiwi edged down to 88.11 against the yen, from yesterday's closing value of 88.42. On the downside, 84.00 is seen as the next support level for the kiwi.

Looking ahead, Germany retail sales and import prices for September, U.K. Nationwide housing prices for October and Eurozone flash CPI data for October are due to be released in the European session.

In the New York session, Canada GDP data for September, U.S. Chicago PMI for October, U.S. Baker Hughes oil rig count data, U.S. personal income and spending data for September, employment cost data for the third quarter and U.S. PCE price index for September are slated for release.