NZD on the backfoot as China momentum continues to slow
Daily Currency Update
The New Zealand dollar was among the worst performers Tuesday, sliding back below US$0.59 amid a risk-off mood triggered by weaker-than-anticipated Chinese Services data. China’s Caixin Services PMI report showed activity fell to its lowest level this year, highlighting concerns surrounding economic momentum and elevating calls for Chinese policy makers and officials to do more to stimulate a post-COVID rebound. The yuan weakened, again giving up ¥7.30 to the USD, triggering a sell-off across risk assets and Asian currencies. The NZD, having slipped below US$0.59 marked fresh 2023 lows at US$0.5860 before finding support.Our attention today turns to the key US ISM services data and a Bank of Canada policy announcement, while another run-on risk asset could see the NZD test new lows.
Key Movers
The USD outperformed through trade on Tuesday, emboldened by a risk-off shift triggered by weaker China services data. Treasury yields jumped as Asian equities and Asia Pacific currencies faced selling pressure after China reported its lowest Caixin Service PMI reading for 2023. The latest report shows a steeper-than-expected decline in activity and serves as a reminder China's momentum is slowing as officials offer only incremental fiscal support. With the USD on the front foot and treasury yields rising the Japanese yen gave up ground allowing the USD to mark new highs at ¥147.80, while the euro and GBP both moved lower. The euro slid below US$1.0750, touching US$1.0725 and is now trading below key technical support. With the pound slipping below US$1.26 the USD DXY index is now at its highest level in 6 months and appears poised to continue the ascent amid growing global growth concerns.Our attention today turns to the key US ISM services data and a Bank of Canada policy announcement.
Expected Ranges
- NZD/USD: 0.5820 - 0.5990 ▼
- NZD/EUR: 0.5450 - 0.5550 ▼
- GBP/NZD: 2.1150 - 2.1550 ▲
- NZD/AUD: 0.9150 - 0.9250 ▲
- NZD/CAD: 0.7980 - 0.8120 ▼