- NZD/USD drops to a one-week low following the release of softer Services PMI from China.
- US-China trade war fears and a modest USD uptick further contribute to the intraday fall.
- Traders look forward to Fed Chair Jerome Powell’s speech for some meaningful impetus.
The NZD/USD pair attracts fresh sellers following the previous day's good two-way price move and drops to a one-week low during the Asian session on Wednesday. Spot prices, however, manage to rebound a few pips in the last hour and currently trade around mid-0.5800s, down over 0.50% for the day.
A private survey released earlier today showed that China’s services sector grew less than expected in November, which adds to worries about the fragile recovery in the world's second-largest economy. In fact, China's Caixin Services PMI unexpectedly fell to 51.5 in November from 52.0 in the prior month. This comes on top of new US export curbs on China and concerns about US President-elect Donald Trump's impending tariffs, which, in turn, weigh heavily on antipodean currencies, including the Kiwi.
The US Dollar (USD), on the other hand, continues to draw support from the upbeat US data released on Tuesday, which eased fears of a significant slowdown in the labor market. Adding to this, expectations that Trump's expansionary policies will boost inflation might force the Federal Reserve (Fed) to take a cautious stance on cutting rates. This, along with persistent geopolitical uncertainty continues to underpin the safe-haven Greenback and exerts additional downward pressure on the NZD/USD pair.
The USD bulls, however, seem reluctant to place aggressive bets and opt to move to the sidelines ahead of Fed Chair Jerome Powell's speech later this Wednesday. Apart from this, the release of the closely-watched US Nonfarm Payrolls (NFP) report on Friday should offer fresh cues about the Fed's rate-cut path. This, in turn, will play a key role in influencing the near-term USD price dynamics. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the NZD/USD pair is to the downside.
Economic Indicator
Caixin Services PMI
The Caixin Services Purchasing Managers Index (PMI), released on a monthly basis by Caixin Insight Group and S&P Global, is a leading indicator gauging business activity in China’s services sector. The data is derived from surveys of senior executives at both private-sector and state-owned companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for CNY.
Read more.Last release: Wed Dec 04, 2024 01:45
Frequency: Monthly
Actual: 51.5
Consensus: 52.5
Previous: 52
Source: IHS Markit
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds near 1.0500 ahead of Powell speech
EUR/USD holds steady at around 1.0500 in the American session on Wednesday. The weaker-than-expected ADP Employment Change and the ISM Services PMI data hurt the USD and help the pair keep its footing. Fed Chairman Powell will speak later in the day.
GBP/USD recovers toward 1.2700 after US data
Following a pullback, GBP/USD edges higher toward 1.2700 in the second half of the day on Wednesday as the US Dollar loses strength following the disappointing data releases. Markets eagerly await Fed Chairman Jerome Powell's speech.
Gold advances to $2,650 area as US yields edge lower
Following a consolidation phase near $2,640, Gold gains traction and rises to the $2,650 area. The benchmark 10-year US Treasury bond yield pushes lower after weak macroeconomic data releases from the US, helping XAU/USD stretch higher.
UnitedHealth unit CEO murdered early Wednesday in Manhattan Premium
UnitedHealthcare CEO Brian Thompson was gunned down in Manhattan Wednesday morning. Thompson was shot by a masked gunman as he was in the city for an investor meeting.
Four out of G10
In most cases, the G10 central bank stories for December are starting to converge on a single outcome. Here is the state of play: Fed: My interpretation of Waller’s speech this week is that his prior probability for a December cut was around 75% before the data.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.