The NZD/USD pair slipped to around 0.6070 during early European hours on Thursday, as the New Zealand Dollar (NZD) came under pressure following weaker-than-expected Chinese services data. China’s Caixin/S&P Global Services PMI dropped to 50.6 in June, its lowest level in nine months, falling short of both the prior reading of 51.1 and the market forecast of 51.0.

This latest soft Chinese data has amplified concerns over China’s economic slowdown, particularly amid persistently low inflation and ongoing issues in the property sector. As a close trading partner of China, New Zealand’s economy—and by extension, the Kiwi—often reacts negatively to signs of weakness in the Chinese economy, given the implications for export demand.

Despite the NZD’s vulnerability to Chinese data, expectations of a potential US Federal Reserve rate cut are helping to cushion the downside. On Tuesday, Fed Chair Jerome Powell noted that the Fed remains data-dependent, and did not rule out a rate cut in July. Adding to the dovish tilt, Goldman Sachs revised its forecast for three rate cuts in 2025, citing weaker labor market dynamics and muted inflationary impact from tariffs.

With US Nonfarm Payrolls (NFP) and labor market data due later today, traders are likely to remain cautious, as a softer employment report could reinforce Fed rate cut expectations and limit further losses in NZD/USD.

Trade Idea:
A weaker-than-expected NFP could see NZD/USD rebound toward 0.6100–0.6130, while strong US jobs data may pressure the pair toward 0.6020 support. Watch for volatility post-release.