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NZD/USD falls as strong US PMI data boosts the dollar

NZD/USD slid about 1% to around 0.5670 after US flash PMIs came in above expectations, strengthening bets on additional Fed hikes.

Reported · Written up by our desk · Major Pairs

The New Zealand dollar fell against the US dollar, with NZD/USD down around 1% to about 0.5670, as stronger-than-expected US data lifted demand for the greenback. FXStreet reported that the flash S&P Global US Composite PMI rose to 58.4 in September from 56 in August, with the Manufacturing PMI jumping to 57 versus 53.5 expected and the Services PMI rising to 58.7 versus a 56 forecast. The readings, all well above the 50 expansion mark, signaled private-sector activity accelerating, which supported the dollar.

The stronger US outlook reinforced expectations that the Federal Reserve can continue tightening. The Fed raised its policy rate by 25 basis points last week to a 3.75% to 4% target range, and its projections pointed to at least one more rate hike this year, according to the article. CME FedWatch showed markets pricing roughly a 68% chance of another hike in October, up from about 55% the prior day.

With the US Dollar Index gaining 0.54% to around 101.10 after reaching a two-month high, the dollar’s strength translated into downward pressure on NZD/USD. The article also linked the move to higher US yields, noting the ten-year yield hovered around 5.06%, and described the pair trading below key short-term moving averages while RSI approached oversold levels.

Latest closeDollar index 101.16 ▲0.7%

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