NZD/USD holds below 0.6100 as China's services sector grows less than expected in June
NZD/USD softens to around 0.6080 in Thursday’s Asian session.
China’s Caixin Services PMI declined to 50.6 in June, weaker than expected.
US June private payrolls posted the first decline in more than two years.
The NZD/USD pair loses traction to near 0.6080 during the Asian trading hours on Thursday. The New Zealand Dollar (NZD) weakens against the US Dollar (USD) after the disappointing Chinese economic data. The US Nonfarm Payrolls (NFP) data for June will be the highlight later on Friday.
Data released by Caixin on Thursday showed that the Services Purchasing Managers Index (PMI) declined to 50.6 in June, compared to 51.1 in May. This figure came in weaker than the expectation of 51.0. The downbeat Chinese economic data exerts some selling pressure on the Kiwi, as China is a major trading partner of New Zealand.
The Reserve Bank of New Zealand is widely expected to pause its easing cycle at its July meeting next week. The RBNZ has already cut rates by 225 basis points (bps) to 3.25%. Policymakers suggested that interest rates are now in the neutral zone, and they want to wait to see the impact of past cuts.
On the USD’s front, the weaker-than-expected US job reports have supported market expectations of a Federal Reserve (Fed) interest rate cut this year. This, in turn, might drag the Greenback lower and create a tailwind for NZD/USD. According to the CME FedWatch tool, short-term interest-rate futures are now pricing in nearly a one-in-four chance of a rate cut by the July meeting after the dovish comments, up from less than one-in-five from earlier.
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
