NZD/USD trades around 0.5860 on Friday, down 0.33% on the day, as investors react to another deterioration in Chinese business activity.
China, New Zealand’s largest trading partner, reported that the official NBS Manufacturing Purchasing Managers Index (PMI) fell to 49.2 in July from 50.3 previously, missing the 50 market consensus
The Non-Manufacturing PMI also declined to 49 from 50.2, pointing to a broader slowdown in economic activity. The weak Chinese data overshadowed more encouraging developments in New Zealand. The ANZ-Roy Morgan Consumer Confidence Index rose by eight points to 99.3 in July, its highest level since February.
Expectations for the economy over the next one and five years also improved, suggesting a gradual recovery in household sentiment. Meanwhile, the US Dollar (USD) regains momentum as investors continue to price in the possibility that the Federal Reserve (Fed) may keep monetary policy restrictive for longer. Markets still see another rate hike as a possibility, supported by persistent inflation concerns.