Kiwi Dollar Slumps on Weak Chinese Data and Hawkish Fed

The New Zealand dollar fell to 0.5860 against the US dollar on Friday, down 0.33% on the session, due to weak Chinese economic data and a hawkish Federal Reserve.

China's official NBS Manufacturing PMI slipped to 49.2 in July from 50.3, undershooting expectations, while the Non-Manufacturing PMI eased to 49 from 50.2. This contraction in manufacturing activity weighed on sentiment and had a ripple effect on the New Zealand economy, which is heavily reliant on exports.

In contrast, domestic signals in New Zealand were more constructive: the ANZ-Roy Morgan Consumer Confidence Index rose eight points to 99.3 in July, its strongest reading since February, and expectations for the economy over the next one and five years improved.

The US dollar firmed as markets continued to factor in the chance that the Federal Reserve keeps policy restrictive for longer, with a roughly 65% probability of a 25-basis-point rise at the September meeting. The final University of Michigan Consumer Sentiment Index was revised up to 55.2 from 54.4, and the Consumer Expectations Index was lifted to 55.4.