NZD Hits Four-Month Low vs USD on China Data, Mideast Tensions

The New Zealand dollar weakened against the US dollar on Friday, with the NZDUSD currency pair dropping to a near four-month low around 0.5710 during Asian trading hours. The decline, which erased recent gains and marked the largest single-day drop in three weeks, stemmed from disappointing Chinese economic data and escalating geopolitical tensions in the Middle East that bolstered demand for the safe-haven US dollar.

China's services Purchasing Managers' Index fell to 52.1 in March from 56.7 the previous month, missing market expectations of 53.7, according to data from RatingDog. Manufacturing activity also contracted, with the official PMI slipping below the 50-point expansion threshold to 49.5, marking the third straight month of decline. Nonmanufacturing PMI hovered at 50.5, barely in positive territory. As New Zealand's largest trading partner, accounting for about 30 percent of its exports, China's slowdown directly pressured the risk-sensitive New Zealand dollar, triggering algorithmic selling and heightened institutional activity. Trading volumes remained thin due to the Good Friday holiday, amplifying the pair's volatility.

Compounding the pressure were reports of...