NZD/USD drops to its lowest level since November 2022, closer to mid-0.5900s – by hareshmenghani NZDUSD China Fed RBNZ Currencies
Growing concerns about the worsening economic conditions in China continue to undermine antipodean currencies, including the New Zealand Dollar , which loses additional ground in reaction to the downbeat domestic data. In fact, Business NZ's Services Index plunged into contraction territory during July and came in at 47.8 – marking the lowest level since January 2022. Moreover, the previous month's reading was also revised down to 49.6 from 50.1 and pointed to the slowing economy.
In fact, the USD Index , which tracks the Greenback against a basket of currencies, climbs to its highest level since July 7 and remains supported by expectations that the Federal Reserve will stick to its hawkish stance. The bets were reaffirmed by the US PPI on Friday, which climbed slightly more than expected in July. Against the backdrop of a moderate rise in consumer prices in July, the data suggested that the battle to bring inflation back to the Fed's 2% target is far from being won.
Apart from the aforementioned fundamental backdrop, Friday's sustained breakdown below the 0.6000 psychological mark is seen as another factor that prompts some follow-through technical selling around thepair. This, in turn, suggests that the path of least resistance for spot prices is to the downside.
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