As the Business NZ PMI drops to 49.9 in August, the NZD/USD depreciates.
The growing probability of three Fed rate decrease bets by the end of 2025 could cause the US dollar to weaken.
The argument for further Fed rate cuts in 2025 is strengthened by weaker US labor market conditions.
After recording gains of about 1% over the last two sessions, the NZD/USD depreciates, closing at 0.5960 in early European hours on Friday. Following the release of the Business NZ Performance of Manufacturing Index (PMI), which dropped to 49.9 in August from 52.8 in July, the pair loses ground as the New Zealand Dollar (NZD) suffers. The paper emphasizes that following a protracted slowdown in 2023 and 2024, manufacturing has not yet experienced consistent growth.
Given the Reserve Bank of New Zealand's (RBNZ) dovish policy outlook, the New Zealand dollar may see additional difficulties. Although the speed of easing would depend on incoming data, RBNZ Governor Christian Hawkesby reiterated on Thursday the central bank's estimate for another 50 basis point fall to the Official Cash Rate (OCR) by year-end.
After US Weekly Initial Jobless Claims surged to its highest level since October 2021, market expectations for three rate cuts this year may potentially put pressure on the US dollar (USD). Later Friday, the highlight will be the release of the University of Michigan (UoM) Consumer Sentiment Index.
The dismal Nonfarm Payrolls report from last week and the rise in unemployment claims overshadow a higher-than-expected consumer inflation estimate. It is important to remember that investors frequently look to non-yielding assets in an effort to increase returns when interest rates are low.
The growing probability of three Fed rate decrease bets by the end of 2025 could cause the US dollar to weaken.
The argument for further Fed rate cuts in 2025 is strengthened by weaker US labor market conditions.
After recording gains of about 1% over the last two sessions, the NZD/USD depreciates, closing at 0.5960 in early European hours on Friday. Following the release of the Business NZ Performance of Manufacturing Index (PMI), which dropped to 49.9 in August from 52.8 in July, the pair loses ground as the New Zealand Dollar (NZD) suffers. The paper emphasizes that following a protracted slowdown in 2023 and 2024, manufacturing has not yet experienced consistent growth.
Given the Reserve Bank of New Zealand's (RBNZ) dovish policy outlook, the New Zealand dollar may see additional difficulties. Although the speed of easing would depend on incoming data, RBNZ Governor Christian Hawkesby reiterated on Thursday the central bank's estimate for another 50 basis point fall to the Official Cash Rate (OCR) by year-end.
After US Weekly Initial Jobless Claims surged to its highest level since October 2021, market expectations for three rate cuts this year may potentially put pressure on the US dollar (USD). Later Friday, the highlight will be the release of the University of Michigan (UoM) Consumer Sentiment Index.
The dismal Nonfarm Payrolls report from last week and the rise in unemployment claims overshadow a higher-than-expected consumer inflation estimate. It is important to remember that investors frequently look to non-yielding assets in an effort to increase returns when interest rates are low.
