• NZD/USD trades slightly higher around 0.5750, helped by an improvement in China’s services climate.
• Monetary policy expectations diverge strongly between New Zealand and the United States, supporting the Kiwi.
• The US Dollar remains under pressure after another round of weaker US labor data.

NZD/USD holds in positive territory around 0.5750 on Wednesday, up 0.20% on the day at the time of writing. The pair benefits from moderate support after the release of a stronger-than-expected Chinese services index, generally a constructive signal for the New Zealand Dollar (NZD) given New Zealand’s strong trade exposure to China.

China’s Services Purchasing Managers Index (PMI) came in at 52.1 for November, above the 52 consensus according to RatingDog, still pointing to expansion even if the index slowed from 52.6 previously. This better-than-expected reading slightly boosts demand for Asia-linked growth currencies such as the Kiwi.

Local monetary policy also supports the NZD. The Reserve Bank of New Zealand (RBNZ) cut its Official Cash Rate by 25 basis points to 2.25% last week, as expected, but signaled that future decisions will depend on the economic and inflation outlook. Several analysts believe the easing cycle may be over for now, reducing downward pressure on the NZD and contrasting with the outlook for US monetary policy.

In contrast, the situation in the United States (US) continues to weigh heavily on the US Dollar (USD). Markets now price in an 85% chance of a 25-basis-point rate cut at next week’s Federal Reserve (Fed) meeting, with further cuts expected in 2026. Speculation that White House adviser Kevin Hassett could replace Jerome Powell, potentially driving policy toward further easing, adds to this dovish bias.

Fresh US data further hit the USD. The ADP Employment Change report showed a loss of 32,000 jobs in November, compared with an expected gain of 5,000, confirming a sharp deterioration in labor-market momentum ahead of the Fed meeting. ADP noted that employers are facing cautious consumers and an uncertain macroeconomic backdrop.

S&P Global surveys also point to a slight cooling. The final Services PMI dropped to 54.1 from the 55.0 preliminary estimate, while the Composite index came in at 54.2. By contrast, the Institute for Supply Management’s (ISM) Services PMI improved to 52.6, above expectations of 52.1, indicating that the services sector remains in expansion territory.

Despite this stronger ISM reading, the US Dollar remains under marked pressure as investors focus on labor indicators to gauge the urgency of Fed easing. If US data continues to undershoot expectations, NZD/USD may keep a bullish bias in the short term. However, a US Dollar rebound remains possible should the next figures surprise to the upside, especially with volatility expected to rise ahead of the Fed meeting.