- NZD/USD edges higher for the second straight day, albeit lacks follow-through buying.
- Markets react little to the disappointing release of China’s Caixin Services PMI for June.
- The focus remains on FOMC meeting minutes for cues about the Fed’s rate-cut path.
The NZD/USD pair builds on the previous day's goodish rebound from the 0.6050-0.6045 area, or its lowest level since mid-May and attracts some follow-through buyers for the second successive day on Wednesday. Spot prices stick to modest intraday gains following the release of softer Chinese data, albeit lack bullish conviction and remain below the 50-day Simple Moving Average (SMA) support breakpoint.
According to the latest data released by Caixin, China's Services PMI fell from 54.0 in May to 51.2 in June as compared to the market forecast for a reading of 53.4. This adds to worries about a slowdown in the world's second-largest economy and acts as a headwind for antipodean currencies, including the Kiwi. Apart from this, expectations that the Reserve Bank of New Zealand (RBNZ) will cut rates earlier than projected further contribute to keeping a lid on any meaningful appreciating move for the NZD/USD pair.
Meanwhile, the US Dollar (USD) struggles to gain any meaningful traction amid growing acceptance that the Federal Reserve (Fed) will begin its rate-cutting cycle later this year. The bets were reaffirmed by relatively dovish remarks by Fed Chair Jerome Powell on Tuesday, saying the US economy has made significant progress on inflation and is back on the disinflationary path. This, along with retreating US Treasury bond yields, fails to lure the USD bulls and should continue to act as a tailwind for the NZD/USD pair.
Market participants now look forward to the US economic docket, featuring the release of the ADP report on private-sector employment and the ISM Services PMI. The focus, however, will remain glued to the FOMC meeting minutes, which, along with the closely-watched US Nonfarm Payrolls (NFP) report on Friday, will influence market expectations about the Fed's rate-cut path. This, in turn, should drive the USD demand in the near term and help determine the next leg of a directional move for the NZD/USD pair.
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 Jul 03, 2024 01:45
Frequency: Monthly
Actual: 51.2
Consensus: 53.4
Previous: 54
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 positive ground above 1.0950 ahead of US CPI release
The EUR/USD pair attracts some buyers to around 1.0980 during the Asian session on Thursday. The Euro edges higher against the Greenback as German conservative leader agreed on a coalition deal with the center-left Social Democrats on Wednesday.
GBP/USD trades near 1.2850 after recovering recent losses, BoE's Breeden speech awaited
GBP/USD recovers its daily losses and continues its winning streak for the third successive session, hovering around 1.2850 during Asian trading hours on Thursday. The British Pound came under pressure following the release of weaker-than-expected data from the RICS Housing Price Balance.
Gold price rallies further beyond $3,100; eyes all-time high amid US-China tariff war
Gold price continues to attract safe-haven flows amid rising US-China trade tensions. Bets for multiple Fed rate cuts weigh on the USD and also benefit the precious metal. A solid recovery in the risk sentiment fails to undermine the safe-haven XAU/USD pair.
XRP back above $2 liquidating $18M in short positions, will the rally continue?
Ripple seeks support above $2.0020 on Thursday after gaining 14% in the past 24 hours. The token trades at $2.0007 at the time of writing, reflecting growing bullish sentiment across global markets.
Tariff rollercoaster continues as China slapped with 104% levies
The reaction in currencies has not been as predictable. The clear winners so far remain the safe-haven Japanese yen and Swiss franc, no surprises there, while the euro has also emerged as a quasi-safe-haven given its high liquid status.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.