Ella 
NZD/USD was stuck in a narrow range around 0.6150 during the Asian session on Monday, fluctuating within the trading range on Friday, indicating that market participants were hesitant ahead of a data-heavy week for the US.
S&P 500 futures rose sharply during the Asian session, showing strong risk appetite among investors. The US dollar index (DXY), which tracks the value of the US dollar against six major currencies, was subdued around 104.60. The 10-year US Treasury yield fell to 4.49% despite deepening uncertainty over the Federal Reserve’s (Fed) shift to policy normalization.
China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) data for May was positive, creating a strong appeal for risk assets. IHS Markit reported that factory activity in the world’s second-largest economy grew faster, rising to 51.7 from a consensus forecast of 51.5 and a previous reading of 51.4. This improved the outlook for the global economy.
This also increased the appeal of the New Zealand dollar. The New Zealand economy is one of China’s major trading partners, and the latter’s strong economic outlook improved the outlook for the New Zealand dollar.
The US August personal consumption expenditures price index (PCE) report showed that price pressures remained stubbornly high, deepening doubts about the Fed’s ability to start reducing interest rates from current levels in September. Core PCE inflation, which excludes volatile food and energy items and is the Fed’s preferred inflation indicator, rose steadily by 2.8%. However, on a month-on-month basis, the underlying inflation data grew 0.2% slower than expected and the previous value of 0.3%. The growth rate is in line with the rate required for inflation to return to the 2% target on a sustained basis.
In today’s trading, investors will focus on the US ISM manufacturing PMI data for May, which will be released at 22:00 Beijing time. The PMI is estimated to improve to 49.8 from the previous value of 49.2. However, data below the critical value of 50.0 will be considered a contraction.
