NZD/USD holds ground following the release of an improved Business NZ Performance of Services Index on Monday. The Business NZ PSI rose to 45.5 in August from 45.2 in July, reaching its highest level since April. The US Dollar receives downward pressure amid uncertainty over the scale of the Fed’s upcoming rate cut. Traders are digesting data showing a slight improvement in business activity in New Zealand. The Business NZ PSI increased to 45.5 in August from 45.
The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.