The NZD/USD pair remained under pressure, trading around 0.5590 during the early Asian session on Friday, weighed down by a stronger U.S. Dollar. Investors are focusing on the upcoming release of the U.S. December ISM Manufacturing Purchasing Managers Index (PMI), which could offer further direction for the pair.
The U.S. Dollar Index (DXY), which measures the value of the U.S. Dollar against a basket of major currencies, rose to near 109.50, its highest level since November 2022. This uptick reflects growing optimism about the U.S. economy and a cautious stance from the U.S. Federal Reserve. The Fed has indicated it will proceed carefully with interest rate cuts, as inflation remains above its 2% target and the economy shows resilience.
On Thursday, data from the U.S. Department of Labor revealed that Initial Jobless Claims for the week ending December 28 fell to 211K, down from 220K (revised from 219K) the previous week. This figure was better than the market consensus of 222K, further strengthening the case for a stronger USD in the near term.
Concerns Over U.S. Tariffs and Chinese Economic Slowdown Weigh on NZD
Meanwhile, the New Zealand Dollar (NZD), often viewed as a proxy for the Chinese economy, faces additional challenges. President-elect Donald Trump’s threat to impose higher tariffs on China and ongoing economic instability in the region could create headwinds for the NZD. China remains a key trading partner for New Zealand, and concerns over the pace of its economic recovery have surfaced.
The latest Chinese Caixin Manufacturing PMI indicated that while China’s manufacturing sector grew in December, it did so at a slower-than-expected rate. This has raised concerns about the momentum of China’s economic recovery, potentially dampening demand for the Kiwi in the near term.
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