The NZD/USD pair is experiencing notable gains, trading above the mid-0.5900s. Despite weaker Chinese PMI data, the pair reached a one-and-a-half-week high. This trend is likely to continue as various factors influence the market.
China's manufacturing sector showed unexpected contraction. The Caixin Manufacturing PMI fell from 51.8 in June to 49.8 in July. This was below the consensus estimate of 51.5. Such results usually weaken antipodean currencies, including the Kiwi.
The New Zealand Dollar (NZD) faces additional pressure from speculations about an early interest rate cut by the Reserve Bank of New Zealand (RBNZ). The domestic annual CPI rate dropped to a three-year low in the June quarter. This data supports the possibility of a rate cut.
Conversely, the US Dollar (USD) is near a two-week low. This followed the Federal Reserve's (Fed) indication of potential rate cuts as early as September. Fed Chair Jerome Powell noted progress in inflation control and labor market cooling, hinting at future rate reductions. These factors have pushed US Treasury bond yields to a multi-month low, negatively impacting the USD.
The positive sentiment across global equity markets is also supporting the NZD. The risk-sensitive Kiwi benefits as investors move away from the safe-haven USD. The lack of significant economic data releases from the US on Thursday leaves the NZD/USD pair influenced by USD dynamics.
The market's attention will now turn to the US Nonfarm Payrolls (NFP) report on Friday. This report could provide further direction for the NZD/USD pair.
In summary, the NZD/USD pair maintains its gains above the mid-0.5900s. This trend is supported by weaker Chinese PMI data, RBNZ rate cut speculations, and a weaker USD. Global market sentiment and upcoming US economic reports will likely influence future movements.
The NZD/USD pair gains momentum, trading above mid-0.5900s despite weaker Chinese PMI data and RBNZ rate cut speculations.
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