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NZD/USD fell to a one-week low during Wednesday’s Asian session, attracting new sellers after a choppy session the previous day. However, spot prices have managed to rebound a few points over the past hour and are currently trading around 0.5800, down more than 0.50% for the day.
China’s services sector grew less than expected in November, a private survey showed earlier today, adding to concerns about a fragile recovery in the world’s second-largest economy. Indeed, China’s Caixin Services Purchasing Managers’ Index unexpectedly fell to 51.5 in November from 52.0 the previous month. It comes after the U.S. imposed new export curbs on China and concerns over imminent tariffs from U.S. President-elect Donald Trump, which in turn weighed heavily on risk currencies including the New Zealand dollar. .
On the other hand, the U.S. dollar (USD) continued to draw support from upbeat U.S. data released on Tuesday, which eased concerns about a sharp slowdown in the labor market. Beyond that, expectations that Trump’s expansionary policies will fuel inflation may force the Federal Reserve to take a cautious stance on cutting interest rates. This, coupled with continued geopolitical uncertainty, continues to support the safe-haven NZD/USD and exert additional downward pressure on NZD/USD.
However, U.S. dollar bulls appear unwilling to bet aggressively, opting instead to sit on the sidelines ahead of a speech by Federal Reserve Chairman Jerome Powell later on Wednesday. In addition, the closely watched U.S. non-farm payrolls (NFP) report will be released on Friday, which will provide new clues on the Fed’s interest rate cut path. This, in turn, will have a key impact on near-term U.S. dollar price movements. Nonetheless, the fundamental backdrop suggests that NZD/USD has minimal downside resistance.
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