New Zealand Dollar holds above 0.5900 as traders await RBNZ decision

The New Zealand Dollar (NZD) maintained its position above 0.5900 on Monday, with traders awaiting the Reserve Bank of New Zealand (RBNZ) decision on Wednesday. The NZD received a slight boost from improved Chinese economic data, which showed a Manufacturing Purchasing Managers Index (PMI) of 49.8 in August, surpassing forecasts of 49.7.

However, the indicator still fell short of the 50 level that distinguishes expansion from contraction in manufacturing activity. The Non-Manufacturing PMI also remained stagnant at 49, indicating a contraction in the sector. Despite the stronger-than-expected improvement, China's trade ties with New Zealand provided moderate support to the NZD, as better Chinese activity often strengthens New Zealand's export prospects.

Meanwhile, domestic investors focused on the upcoming RBNZ decision, with the NZIER Monetary Policy Shadow Board suggesting a potential 25 basis point increase in the Official Cash Rate (OCR) in September. However, recent declines in New Zealand business confidence, as indicated by the ANZ Business Confidence Index, tempered this optimism.

On the US side, Federal Reserve Chair Kevin Warsh's hawkish statements at the Jackson Hole symposium increased market expectations for a Federal Reserve rate hike in September, currently estimated at 62% by the CME FedWatch Tool. This shift in the US monetary policy outlook bolstered the US Dollar (USD), which in turn held the NZD/USD rate near 0.5910.

The pair was trading just above the 100-period and 200-period Simple Moving Averages (SMAs) at 0.5946 and 0.5949, respectively, and was hovering near oversold territory on the Relative Strength Index (RSI) at 35.9. In the near term, support was found at 0.5900, while resistance was identified at 0.5930, followed by key moving averages at 0.5946, 0.5949, and a stronger barrier at 0.5967.