NZD/USD trades firmly above the mid-0.6200s ahead of Chinese PMI

• NZD/USD attracts some buyers around 0.6256, adding 0.08% on the day.
• The FOMC signaled around three 25 basis points (bps) rate cuts in 2024.
• China’s Caixin Manufacturing PMI rose to 50.8 in December versus 50.7 prior, better than estimated.
• Market players will focus on Chinese Caixin Service and US ISM Manufacturing PMI ahead of FOMC Minutes.

The NZD/USD pair gains ground during the early Asian trading hours on Wednesday. The renewed US Dollar (USD) demand exerts some selling pressure on the pair. NZD/USD currently trades near 0.6256, up 0.08% on the day.

At the FOMC December meeting, the committee signaled around three 25 basis points (bps) rate cuts in 2024. According to the CME FedWatch tool, the markets expected no hike for the January meeting and have priced in over 78% odds of rate cuts for March 2024, according to the CME FedWatch tool.

The release of the minutes of the December FOMC meeting late Wednesday will provide additional information about policymakers’ views. Traders will also take more cues from the US labor data. The NFP figure is expected to add 168K jobs in the US economy in December versus 199K in November, while the Unemployment Rate is estimated to rise to 3.8%. Stronger than expected daughter called to challenge the market’s anticipation of rate cuts and might lift the USD higher against its rivals.

The economy docket from New Zealand is quiet this week. On Tuesday, China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) rose to 50.8 in December from November’s expansion of 50.7, better than the market expectations of a 50.4 print. The positive developments surrounding the Chinese economy could support the China-proxy New Zealand Dollar (NZD) and act as a tailwind for the NZD/USD pair.

Looking ahead, market participants await the Chinese Caixin Services PMI for December. Also, the final US ISM Manufacturing PMI report and FOMC Minutes will be due on Wednesday.