NZD/USD declines after facing barricades around 0.6100 on downbeat China’s Services PMI data

• NZD/USD has sensed selling pressure around 0.6100 as China’s Services PMI has trimmed.
• A follow-up decline in China’s Services PMI after displaying weak Manufacturing PMI has weakened kiwi.
• Expectations of the Fed’s third consecutive rate hike by 75 bps are gaining traction.

The NZD/USD pair has witnessed selling pressure after attempting to cross the immediate hurdle of 0.6100 in the Asian session. In early Tokyo, the asset opened lower than Friday’s closing price but found buyers as oscillators turned oversold on a lower timeframe. However, the follow-buying buying has failed to cross the critical hurdle of 0.6100 and is declining firmly to test the previous week’s low around 0.6050.

The pair have witnessed a steep fall after the release of downbeat China’s Caixin Services PMI data. The economic data landed at 55, lower than the prior release of 55.5. As the Chinese economy is facing a slowdown amid a resurgence of Covid-19, again and again, PMI activities are facing severe heat. Therefore, a decline in Services PMI was highly expected.

Last week, China’s Caixin Manufacturing PMI data also remained weaker. The economic data was trimmed to 49.5 against the consensus of 50.2 and the prior release of 50.4. As lockdown curbs are escalating in the Chinese economy, economic activities are facing wrath. It is worth noting that New Zealand is a leading trading partner of China and a slowdown in Chinese activities could weaken the kiwi’s appeal.

Meanwhile, the US dollar index (DXY) has refreshed its two-decade high at 110.09 as odds of a consecutive 75 basis points (bps) interest rate hike by the Federal Reserve (Fed) has advanced. Soaring employment additions in the US labor market have strengthened the appeal for more bumper rate hikes. However, the Average Hourly Earnings data remained stagnant. The labor cost index landed at 5.2, similar to its prior close but lower than the consensus of 5.3%. Optimism brewed on stellar job creation could be offset by subdued labor cost data.