Ella 
NZD/USD in Asia attracted some bears on Tuesday and fell to a one-week low near the 0.5920-0.5915 area on disappointing Chinese PMI data.
In fact, a private survey showed that business activity in China’s services sector expanded for the eighth consecutive month in August, albeit at the slowest pace in eight months. The Caixin/S&P global services PMI fell to 51.8 last month from 54.1 in July, the lowest reading since December 2022. The report revived concerns about deteriorating economic conditions in the world’s second-largest economy, putting pressure on commodity currencies including the New Zealand dollar.
In addition, some bulls in the US dollar have become another factor that puts pressure on the NZD/USD to decline. However, the market is increasingly accepting that the Fed is nearing the end of the interest rate hike cycle, which may prevent the dollar bulls from building aggressive positions and limit the pair’s losses. Investors now seem confident the Fed will keep rates on hold at its September meeting, a bet confirmed by mixed U.S. jobs data.
Coupled with the latest optimism surrounding China’s expansion of stimulus measures, it still supports the overall optimistic tone of the stock market, which may benefit the risk-sensitive currency New Zealand dollar. S&P’s reduced likelihood of downgrading New Zealand’s rating also supports the pair, although aggressive bearish traders should remain cautious even as the country’s fiscal and current account deficits face challenges.
