Home Daily Commentaries New Zealand retreats on disappointing Chinese economic data

New Zealand retreats on disappointing Chinese economic data

Brett Ottawa
Written by
Brett Ottawa

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market.

| Wednesday 7 May, 2025

Daily Currency Update

The New Zealand dollar is slightly weaker this morning when valued against the Greenback currently trading at 0.5957 at the time of writing. NZD/USD is retreating during Tuesday’s Asian session after two consecutive days of gains. The pullback follows a decline in the New Zealand dollar (NZD), pressured by disappointing Chinese economic data. China’s services sector grew at its slowest pace since September, with the Caixin Services Purchasing Managers' Index (PMI) falling to 50.7 in April from 51.9 in March—well below the forecast of 51.7. The weaker-than-expected reading adds to concerns that US tariffs are impacting demand and weighs on the NZD, as China is New Zealand’s largest trading partner. New Zealand releases the employment report for the first quarter on Wednesday. The labor market is showing signs of weakening, with employment change posting two straight declines. The markets are projecting a slight improvement, with an estimate of 0.1% for Q1. The unemployment rate has accelerated for seven consecutive quarters and is expected to rise to 5.3% from 5.1% in Q4 2025. This would be the highest level since Q4 2016 and would support the case for the Reserve Bank of New Zealand to lower rates for a sixth straight time at the May 28 meeting. At the April meeting, members warned that the tariffs created downside risks for growth and inflation in New Zealand.

Key Movers

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against a basket of currencies, remained under heavy selling pressure on Tuesday as investors turned defensive ahead of the Federal Reserve’s (Fed) monetary policy decision. The Federal Reserve is virtually certain to maintain interest rates at 4.25-4.5% on Wednesday. The meeting will be interesting as Fed Chair Powell is expected to push back against pressure from President Trump to lower rates. The Fed is likely to remain on the sidelines until the uncertainty over US tariffs becomes clearer. Trump's zigzags over tariffs have triggered wild swings in the financial markets, but Trump has said some trade agreements will be announced soon. Fed Chair Jerome Powell’s press conference following Wednesday’s meeting could define the next policy move, with markets watching for dovish cues. The Dow Jones Industrial Average dropped 283 points, or 0.7%, while the S&P 500 and Nasdaq Composite declined 0.8% and 0.9%, respectively. Losses were led by heavyweight tech stocks including Nvidia, Meta Platforms, and Tesla, each falling over 1%. Financials also weighed, with Goldman Sachs shares slipping.

Expected Ranges

  • NZD/USD: 0.5900 - 0.6100 ▲
  • NZD/EUR: 0.5200 - 0.5400 ▲
  • GBP/NZD: 2.2100 - 2.2300 ▼
  • NZD/AUD: 1.0700 - 1.0900 ▼
  • NZD/CAD: 0.8200 - 0.8400 ▲

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.

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