Ella 
NZD/USD faced some selling pressure around 0.5945 in early Asian trading on Wednesday. Risk aversion and a small rebound in the US dollar pushed NZD/USD to its lowest level since May 2. Traders will closely watch the initial S&P Global Purchasing Managers Index for June in the United States, released on Wednesday, for new impetus.
The New Zealand dollar fell as weak consumer price index (CPI) inflation in the second quarter (Q2) of New Zealand and expectations of an imminent rate cut by the Reserve Bank of New Zealand increased. In addition, market concerns about sluggish economic activity in China and the unexpected rate cut by the People’s Bank of China at the beginning of the week also led to the decline of the New Zealand dollar.
The market expects the Federal Reserve to cut interest rates from September 2024. Jonathan Pingle, chief US economist at UBS, said that unless there is a significant unexpected increase in inflation data, the Fed’s target range is expected to be lowered by 25 basis points at the September and December meetings. Rising bets on a rate cut by the Federal Reserve are putting broad pressure on the dollar and could limit NZD/USD’s downside.
Investors will get more clues from the U.S. S&P Global PMI preliminary reading for July to confirm the outlook for interest rates. The manufacturing PMI is expected to rise to 51.7 in July from 51.6 previously, while the services PMI is expected to fall slightly to 54.4 in July from 55.3.
