- NZD / USD difficulties following disappointing Chinese economic data.
- PMI Caixin Services in China fell to 50.7 in April from 51.9 in March, well below 51.7 forecasts.
- The US dollar receives support from expectations that the federal reserve will hold stable rates on Wednesday.
NZD / USD withdraws approximately 0.5960 during the Asian session on Tuesday after two days of consecutive gains. The withdrawal follows a drop in the New Zealand dollar (NZD), under pressure by disappointing Chinese economic data.
The Chinese services sector has increased at its slowest rate since September, the Caixin Services purchasing directors (PMI) fell to 50.7 in April from 51.9 in March, well below the 51.7 forecast. The weakest than expected reading adds to the concerns that American prices have an impact on demand and weigh on the NZD, because China is the largest trading partner in New Zealand.
Focus is now turning to the next unemployment report in New Zealand, which is expected to show a higher unemployment rate. This could reinforce expectations for additional monetary easing, the markets being already raising 75% of a price drop of 25 points in the meeting of the Reserve Bank of New Zealand (RBNZ) later this month. A total of three rate drops are planned this year.
Meanwhile, the US dollar index (DXY) bounces nearly 99.80 after consecutive losses, supported by expectations that the Federal Reserve (Fed) will hold stable rates on Wednesday. The attention of the market is firmly on the comments of the president of the Fed, Jerome Powell, in the middle of the current pricing tension and the pressure of President Trump to reduce the rates.
US Treasury Secretary Scott Bessent said on Monday that the United States was “very close to certain transactions”, echoing Trump's weekends on trade agreements. However, Trump excluded everything immediate with Chinese President Xi Jinping. The Chinese Ministry of Commerce has confirmed that it was examining an American proposal to restart negotiations.
Economic indicator
Caixin PMI Services
The Caixin Services Purchase Managers Index (PMI), published on a monthly basis by Caixin Insight Group and S&P Globalis a leading indicator to assess commercial activity in the Chinese services sector. The data is derived from surveys with senior executives of companies in the private sector and the State. The responses to the survey reflect the change, if necessary, during the current month compared to the previous month and can anticipate the 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 noted any change compared to the previous month. Reading greater than 50 indicates that the economy of services is generally expanding, a bullish sign for the renminbi (CNY). Meanwhile, reading less than 50 indicates that the activity among service providers is generally decreasing, which is considered to be a bearish for CNY.
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Latest version:
Mar May 06, 2025 01:45
Frequency:
Monthly
Real:
50.7
Consensus:
51.7
Previous:
51.9
Source:
IHS Markit
