- NZD/USD gains ground around 0.6195 in Friday’s Asian session.
- The growing speculation of a Fed rate cut this year weighs on the US Dollar.
- The upbeat Chinese May Services PMI data supports the China-proxy NZD.
The NZD/USD pair trades on a stronger note near 0.6195 during the early Asian session on Friday. The weaker US Dollar (USD) amid rising speculation of an interest rate cut from the US Federal Reserve (Fed) this year continues to underpin the NZD/USD pair. The market might turn cautious later on Friday ahead of the release of highly anticipated US Nonfarm Payrolls (NFP) data for May.
The weaker US economic data and softer labour market data this week spur expectations of an interest rate cut from the Fed in September. The US weekly Initial Jobless Claims for the week ended May 31 increased by 8K to 229K from the previous week of 221K. This figure came in above the consensus of 220K. Meanwhile, the 4-week moving average of initial unemployment claims rose to 222K from 210K last month to near the highest level in 9 months. On Wednesday, the US ADP Employment report showed 152K net job additions, down from the previous reading of 188K.
According to Reuters polls conducted between May 31 and June 5, nearly two-thirds of economists now anticipate the Fed to cut interest rates in September. The US May NFP report will be closely watched, which is estimated to see 185K job additions in the US economy in May. The softer-than-expected data could fuel the speculation of Fed rate cuts and undermine the Greenback against the Kiwi.
The encouraging Chinese data lends some support to the New Zealand Dollar (NZD) as China is New Zealand's major trade partner. Data released from Caixin on Wednesday showed that China's Services PMI improved to 54.0 in May from 52.5 in April, above market estimates of 52.6 in the reporting period.
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