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NZD/USD slides as weaker China PMI hits risk sentiment
China’s manufacturing PMI fell to 49.2 in July, and the U.S. dollar firmed as markets leaned toward a September Fed rate hike.
NZD/USD traded around 0.5860 on Friday, down 0.3% on the day, after investors reacted to another deterioration in Chinese business activity, according to FXStreet. China’s official NBS Manufacturing Purchasing Managers Index dropped to 49.2 in July from 50.3 previously, missing the 50 market consensus. The Non-Manufacturing PMI also fell to 49 from 50.2, signaling a broader slowdown that weighed on the New Zealand dollar. The move came despite some improvement at home for New Zealand, where the ANZ-Roy Morgan Consumer Confidence Index rose eight points to 99.3 in July, its highest level since February. Expectations for the economy over the next one and five years also improved, pointing to a gradual recovery in household sentiment. At the same time, the U.S. dollar regained momentum as investors continued to price in the Federal Reserve keeping policy restrictive for longer, FXStreet said. CME FedWatch data put the odds of a 25 basis point rate increase at about 65% for the September meeting, with U.S. data also reinforcing that view, including a University of Michigan Consumer Sentiment Index revision higher to 55.2 in July.