New Zealand Dollar Rallies on Strong Chinese Services Data and Hawkish US Rate Hike Bets

The New Zealand Dollar rebounded against the US Dollar on Thursday, breaking a four-session losing streak, as stronger-than-expected Chinese services data and hawkish comments from Federal Reserve Chair Kevin Warsh boosted the Kiwi.

China's Services Purchasing Managers' Index (PMI) rose to 51.4 in August, beating both July's 50.4 reading and the market consensus of 50.6. This marked a significant increase from July's 50.4 reading and exceeded market expectations.

The New Zealand Dollar drew support from the perception of firmer Chinese demand, as China is a key export destination for New Zealand. However, the upside in NZD/USD was tempered by firmer expectations of tighter US monetary policy, with Fed Chair Kevin Warsh's hawkish remarks at Jackson Hole lending underlying support to the US Dollar.

FedWatch tool data shows that traders now assign a 62.3% probability to a 25-basis-point rate increase in September, up from around 40% prior to Warsh's speech. The technical picture for NZD/USD remains cautious, with price action clustered just above the lower Bollinger Band.