The New Zealand dollar came under renewed pressure on Wednesday, slipping below the 0.5850 mark against the US dollar as risk appetite deteriorated across global markets. The Kiwi has now shed over 1% from Monday’s highs near 0.5915, with bearish momentum building amid heightened concerns over global debt sustainability.
US dollar gains as safe-haven demand intensifies
The greenback continues to outperform its major peers, supported by a broad flight to safety. Mounting fiscal concerns in key economies have triggered a sell-off in sovereign bonds, sending long-term yields sharply higher and dampening demand for risk-sensitive assets. The US Dollar Index (DXY) remains firm, shrugging off weaker-than-expected ISM manufacturing data, which showed a sixth consecutive month of contraction in August.
Gold has also benefited from the risk-off mood, reinforcing the defensive tone in markets and adding further support to the dollar.
China data fails to lift NZD sentiment
Despite upbeat services sector data from China, the New Zealand dollar failed to find support. The Caixin Services PMI rose to a 15-month high of 53.0 in August, up from 52.6 in July, signaling resilience in China’s domestic demand. However, the positive surprise was overshadowed by broader macro concerns, limiting any upside for the Kiwi—especially given New Zealand’s strong trade exposure to China.
Technical outlook: bears eye 0.5835 support
NZD/USD was rejected at two-week highs earlier this week and has now retreated below 0.5850 in early European trading. Sellers are targeting Tuesday’s low near 0.5835, which could act as immediate support. A break below this level may open the door to further downside, particularly if global sentiment remains fragile and US data continues to favor the dollar.
