New Zealand Dollar weakens after China PMI miss as the US Dollar rebounds
NZD/USD trades around 0.5860 on Friday, down 0.33% on the day, as investors react to another deterioration in Chinese business activity.
On Friday, the New Zealand Dollar (NZD) weakened by 0.33% against the US Dollar (USD), trading at around 0.5860, after China's manufacturing Purchasing Managers' Index (PMI) fell short of expectations. China's official PMI dropped to 49.2 in July, down from 50.3 the previous month, failing to meet the 50 market consensus. The Non-Manufacturing PMI also declined to 49, indicating a broader economic slowdown.
This disappointing Chinese data overshadowed some positive developments in New Zealand. The ANZ-Roy Morgan Consumer Confidence Index increased by eight points to 99.3 in July, marking its highest level since February. Additionally, expectations for the economy over the next one and five years improved, suggesting a gradual recovery in household sentiment.
Meanwhile, the US Dollar (USD) gained strength as investors priced in the likelihood of the Federal Reserve (Fed) maintaining restrictive monetary policy for a longer duration. Traders assigned approximately a 65% chance to a 25-basis-point interest rate hike at the September meeting, as per the CME FedWatch Tool. Recent US economic data further supported this view, with the University of Michigan Consumer Sentiment Index revised higher to 55.2 and Consumer Expectations Index at 55.4. New Zealand Dollar emerged as the strongest against the Swiss Franc.
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