- NZD/USD trades softer near 0.6195 in Thursday’s early Asian session.
- The US Job Openings were weaker than expected in July.
- China's growth pessimism weighs on the Kiwi.
The NZD/USD pair loses traction around 0.6195 during the early Asian session on Thursday. The concerns about the Chinese economic slowdown weigh on the China-proxy New Zealand Dollar (NZD). Traders will keep an eye on the release of the US ISM Services Purchasing Managers Index (PMI), which is due later on Thursday.
The US Job openings fell more than expected in July, adding a sign of the labor market softening. The Job Openings and Labor Turnover Survey showed that available positions fell to 7.67 million in July from 7.91 million openings in June, the lowest level since January 2021.
Traders will closely watch the US labor market data on Friday, including the US Nonfarm Payrolls (NFP) and the Unemployment Rate. The US economy is expected to see 160,000 job additions in August, while the unemployment rate is projected to tick lower to 4.2%. Deutsche Bank economists suggested that a weaker NFP reading or a rise in the Unemployment Rate could reinforce market expectations for a 50 bps rate cut by the Federal Reserve (Fed), which might further undermine the Greenback.
On the Kiwi front, Bank of America Global Research analysts cut China’s GDP forecasts from 5.0% to 4.8%, raising concern about the economic slowdown. Additionally, the Chinese Caixin Services PMI was weaker than expected in August, dropping to 51.6 from 52.1 in July. The negative outlook surrounding the Chinese economy might cap the pair’s upside as China is a major trading partner to New Zealand.
(This story was corrected on September 5 at 09:15 GMT to say that economists expect the US employers to have added 160,000 jobs in August, not 161,000.)
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
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 tumbles toward 1.1450 as geopolitical tensions escalate
EUR/USD stays under bearish pressure and falls toward 1.1450 on Monday. The renewed US Dollar buying, amid the deepening crisis in the Middle East, and mixed PMI data releases from Germany and the Eurozone weigh on the pair as focus shifts to US data and central bank talks.
Could Iran block the Strait of Hormuz? Why Oil is on edge after US strikes
As the Israel-Iran conflict reaches new heights, an old threat is coming back to haunt the markets: that of the closure of the Strait of Hormuz. This narrow arm of the sea in the Persian Gulf, wedged between Iran to the north and the United Arab Emirates and Oman to the south, is much more than a simple sea passage.
Gold stays below $3,400 on broad USD strength
Gold stays on the back foot to start the week and trades below $3,400. Although XAU/USD's manages to limit its losses, the US Dollar (USD) also benefits from escalating geopolitical tensions in the Middle East, making it difficult for the pair to gather recovery momentum.
Five fundamentals for the week: World anxiously awaits Iran's response Premium
The Middle East remains in the spotlight after a turbulent weekend. Fed Chair Jerome Powell faces lawmakers and may shed more light on the central bank's thinking, and a key inflation figure is expected later to promise a strong end to the week.
GBP/USD holds recovery above 1.3400, with eyes on UK PMI, Middle East woes
GBP/USD is holding its rebound above 1.3400 in the European session on Monday. The fears that Iran would retaliate against US attacks on its nuclear sites continue to support the safe-haven US Dollar. Investors await the June preliminary PMI readings from the UK and the US for fresh trading directives.
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.