• NZD/USD is displaying topsy-turvy moves after a downbeat release of China’s PMI data.
• China’s Manufacturing PMI slipped to 49.2 vs. 50.0 while Non-Manufacturing PMI dropped to 48.7 vs. 51.9 as expected.
• Kiwi’s weak projections for the labor cost index could dent the sentiment of households.

The NZD/USD pair has sensed selling pressure while attempting to overstep the critical hurdle of 0.5810 in the Tokyo session. The asset has witnessed stiff hurdles amid surpassing the immediate resistance of 0.5810. Downbeat Chinese PMI data weigh on kiwi bulls in collaboration with a rebound in risk-off mood amid accelerating anxiety ahead of the Federal Reserve (Fed)’s monetary policy.

China’s official Manufacturing PMI has landed lower at 49.2 vs. the projections of 50.0 and the prior release of 50.1, reported by the National Bureau of Statistics. Also, the Non-Manufacturing PMI has been recorded as significantly lower at 48.7 against the expectations of 51.9 and the former release of 50.6. It seems that the continuation of the no-tolerance Covid-19 policy has weighed pressure on economic activities.

The risk aversion theme is gaining traction as yields have rebounded after a bumpy ride. The 10-year US Treasury yields have accelerated to 4.05% while the S&P500 futures have extended their losses.

Also, the Fed is expected to hike interest rates by 75 basis points (bps) for the fourth time.

This week, the kiwi employment data will also remain in focus. The Employment Change for the third quarter is seen at 0.5% against the former print of 0%. While the Unemployment Rate could trim to 3.2% vs. 3.3% released earlier. The catalyst that could dampen the sentiment of households is a decline in the labor cost index, which is seen lower at 1% against the prior release of 1.3%.

Price pressures are skyrocketing in the kiwi economy and households need higher earnings to payout inflation-adjusted goods and services. Lower expansion in earnings would be unable to offset higher expenses, which could result in a slower demand in the NZ zone.