The NZD/USD pair continues its decline for the third consecutive session, trading around 0.6200 during Asian hours on Tuesday. The weakness in the New Zealand Dollar (NZD) is attributed to the strengthening US Dollar (USD), supported by reduced expectations of a significant interest rate cut by the US Federal Reserve in September.
Traders are awaiting the ISM Manufacturing PMI data later today, which will provide further insight into the US economic outlook. Attention will then shift to Friday’s US Nonfarm Payrolls (NFP) report for clues on the timing and magnitude of potential Fed rate cuts.
Rising US Treasury yields have bolstered the USD, though its gains may be tempered by market forecasts of a 25 basis point rate cut by the Fed. The CME FedWatch Tool indicates a nearly 70% probability of such a cut at the Fed’s September meeting.
In New Zealand, the Terms of Trade Index rose by 2.1% quarter-on-quarter in Q2, recovering from a 5.1% decline in the previous quarter and exceeding the expected 2.0% increase. This improvement was driven by a 5.2% rise in export prices and a 3.1% increase in import prices.
The NZX 50 Index remains stable around 12,500, with limited global influence as Wall Street was closed for Monday’s break. Traders are also evaluating mixed manufacturing PMI data from China, New Zealand’s key trading partner. Official figures reported the sharpest contraction in factory activity in six months, while private surveys indicated ongoing expansion in the manufacturing sector for the seventh time this year.
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