New Zealand dollar gives up ground as PMI data helps fuel USD rebound

Key Movers

There is plenty to digest this morning as PMI data helped drive direction through trade on Tuesday. The data served to highlight the gap between the US and Europe with eurozone composite PMIs falling, marking their steepest contraction since November 2020. With manufacturing deeply entrenched within a contractionary trend and services data disappointing the euro slipped back below US$1.06, giving up 0.7%. With UK PMI data sluggish the pound gave up ground as well, allowing the USD DXY index to unwind Monday’s decline and climb back toward 106.30. with US PMI data stronger than expected the gap between the US and Europe is only expected to widen, underpinning USD strength.
In other news reports China’s legislature has approved a rare-mid-year budget expansion that will allow an increase in the fiscal deficit and injection of 1 trillion yuan into disaster relief and construction projects. The promise of greater Chinese domestic spending helped improve risk demand while President Xi looked to sure up confidence in the economy and financial system by visiting the People's Bank of China and State Sovereign Fund.
Our attention today turns to Australian CPI data and the Bank of Canada policy update.