NZD/USD remains vulnerable near 0.5950 due to weak Chinese PMI data

NZD/USD struggles following disappointing Chinese economic data.
China’s Caixin Services PMI fell to 50.7 in April from 51.9 in March, well below the forecast of 51.7.
The US Dollar receives support from expectations that the Federal Reserve will hold rates steady on Wednesday.

Akhtar Faruqui FXStreet

NZD/USD is retreating around 0.5960 during Tuesday’s Asian session after two consecutive days of gains. The pullback follows a decline in the New Zealand Dollar (NZD), pressured by disappointing Chinese economic data.

China’s services sector grew at its slowest pace since September, with the Caixin Services Purchasing Managers' Index (PMI) falling to 50.7 in April from 51.9 in March—well below the forecast of 51.7. The weaker-than-expected reading adds to concerns that US tariffs are impacting demand and weighs on the NZD, as China is New Zealand’s largest trading partner.

Focus now turns to New Zealand's upcoming unemployment report, expected to show a higher jobless rate. This could bolster expectations for further monetary easing, with markets already pricing in a 75% chance of a 25-basis-point rate cut at the Reserve Bank of New Zealand’s (RBNZ) meeting later this month. A total of three rate cuts are anticipated this year.

Meanwhile, the US Dollar Index (DXY) is rebounding near 99.80 after back-to-back losses, supported by expectations that the Federal Reserve (Fed) will hold rates steady on Wednesday. Market attention is firmly on Fed Chair Jerome Powell’s comments amid ongoing tariff tensions and pressure from President Trump to cut rates.

US Treasury Secretary Scott Bessent said Monday that the US is “very close to some deals,” echoing Trump’s weekend remarks about nearing trade agreements. However, Trump ruled out any immediate talks with Chinese President Xi Jinping. China’s Commerce Ministry confirmed it is reviewing a US proposal to restart negotiations.

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.

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