NZD/USD Pauses Near 0.5850 as Chinese Data and Fed Hawkishness Balance
The NZD/USD pair experienced mild gains on Thursday, reaching around 0.5855 during early European trading hours. This increase was largely due to stronger-than-expected Chinese economic data, which showed an expansion in services activity in August.
China's Services Purchasing Managers' Index (PMI) rose to 51.4 from 50.4 in July, exceeding market consensus of 50.6. This positive development provided support to the China-proxy Kiwi, as China is New Zealand's major trading partner.
However, Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium had a more bearish impact on the pair. He emphasized that recent inflation data was moderate but not enough to consider underlying inflation trends to have improved substantially.
The RBNZ raised the Overnight Cash Rate (OCR) by 25bp to 2.75%, citing a gradual removal of monetary stimulus as necessary to return inflation sustainably to the target level.