NZD/USD pares Chinese PMI-led losses to 100-DMA neighborhood

The NZD/USD pair has managed to bounce off few pips from session lows and is now tradign with only minor losses around 0.7075 region.

Spot extended previous session's sharp reversal move from near three-month highs and dropped to closer to its immediate support around 100-day SMA. Today's softer Chinese manufacturing data, with Caixin manufacturing PMI dropped into contraction territory to 11-month low level of 49.6 in May, weighed heavily on commodity-linked currencies, including the Kiwi.

Adding to this, a modest pick-up in the US Dollar buying interest, backed by a sharp rebound in the US treasury bond yields, further collaborated to the pair's downslide for the second consecutive session.

Meanwhile, Wednesday's RBNZ financial stability report, which showed that risks to the domestic financial system has receded, continued lending support to New-Zealand Dollar and helped limited further downslide, at least for the time being.

Next in focus would be the US economic docket, featuring the release of ADP report, weekly jobless claims and ISM manufacturing PMI, which would be looked upon to grab some short-term trading opportunities. Investors' focus, however, would remain glued to the keenly watched US monthly jobs report, due on Friday.

Technical levels to watch

Immediate resistance is now pegged near 0.7095 level, which is closely followed by the very important 200-day SMA hurdle near 0.7105-10 region. A clear break through these immediate resistance levels is likely to accelerate the up-move towards 0.7155-60 horizontal resistance before eventually darting towards reclaiming the 0.7200 handle.

On the flip side, 100-day SMA near 0.7060-55 region now becomes immediate support to defend, which if broken could accelerate the corrective slide towards 0.7025 intermediate support en-route the key 0.70 psychological mark.