• NZD/USD is gaining ground on rising export volumes and a mighty rebound in trading conditions in Q1.
• The New Zealand dollar received support from the China Services PMI, marking the 17th consecutive month of expansion in services activity.
• There is growing speculation that the Fed will start lowering interest rates from the September meeting.

NZD/USD is recovering from its recent losses and is hovering around 0.6180 in the early European hours on Wednesday. New Zealand’s first quarter data showed significant growth in export volumes and a mighty rebound in terms of trade, providing support for the New Zealand dollar (NZD). The index measuring the ratio of export prices to import prices increased by 5.1%, after a decline of 7.8% in the previous quarter and exceeding market forecasts assuming an raise of 3.1%.

Caixin China Services PMI was 54.0 in May, beating expectations of 52.6 and the previous value of 52.5. This marked the 17th consecutive month of growth in services activities, marking the fastest pace since July 2023. This could support the New Zealand dollar (NZD) as any changes in the Chinese economy could impact the kiwi market as the two countries are close trading partners.

The appreciation of the NZD/USD pair can be linked to growing speculation that the Federal Reserve (Fed) will start cutting interest rates from its September meeting, following a series of tender macroeconomic data from the US.

On Tuesday, U.S. JOLTS job postings fell by 296,000 in April to 8.059 million, down from March’s 8.355 million, marking the lowest level since February 2021. That number also missed the market consensus of 8.340 million.

According to the CME FedWatch Tool, the probability of a Fed rate cut of at least 25 basis points increased to almost 64.9%, up from 46.3% a week earlier.