NZD/USD gains ground above 0.6160 following Chinese Services PMI data
- NZD/USD loses ground near 0.6162 on the firmer USD.
- New Zealand’s ANZ Commodity Price came in at a 1.3% drop in November from a 2.9% rise in October.
- US Factory Orders dropped 3.6% MoM in October versus a 2.3% rise prior.
The NZD/USD pair holds positive ground around the mid-0.6100s during the early Asian session on Tuesday. The recovery of the pair is backed by the stronger-than-expected Chinese data. At press time, NZD/USD is trading near 0.6162, down 0.06% on the day.
The latest data from National Bank ANZ showed on Tuesday that New Zealand’s ANZ Commodity Price came in at a 1.3% drop in November from a 2.9% rise in October. Earlier this week, New Zealand’s Terms of Trade Index for the third quarter (Q3) declined 0.6% QoQ versus 0.3% prior. Good Export prices dropped 1.5% QoQ from the previous reading of a 6.8% rise while Import prices for goods declined 0.8% QoQ from a 1.0 drop in the previous reading.
Elsewhere, China's Services Purchasing Managers' Index (PMI) surges to 51.5 in November from the October reading of 50.4. The markets had expected a print of 50.8. The upbeat data from China boosts the China-proxy New Zealand Dollar (NZD) as China is New Zealand's largest trading partner.
That being said, the hawkish tilt from the Reserve Bank of New Zealand (RBNZ) lifts the New Zealand Dollar (NZD) and acts as a tailwind for the NZD/USD pair. It’s worth noting that RBNZ held the cash rate steady at 5.5% last week but noted inflation remained too high and that further policy tightening might be needed if price pressures did not ease.
On the other hand, the market is now pricing the US Federal Reserve (Fed) to end the tightening cycle and will begin cutting the rate as early as next March. Fed Chair Jerome Powell stated on Friday that it was premature to rule out additional rate hikes or start discussing cuts.
On Monday, the US Factory Orders dropped 3.6% MoM in October versus a 2.3% rise prior, according to the US Census Bureau. Market players await the US ISM Services PMI, which is expected to rise from 51.8 to 52.0.
The US Nonfarm Payrolls (NFP) report on Friday will be in the spotlight, which is expected to add 180K jobs in November. Traders will take cues from these events and find trading opportunities around the NZD/USD pair.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
