NZD/USD consolidates its gains near 0.6200 amid weaker US PMI data

• NZD/USD trades flat around 0.6190 in Tuesday’s early Asian session.
• The US Manufacturing PMI dropped to 48.7 in May from 49.2 in April, weaker than expected. 
• The improving Chinese Caixin Manufacturing PMI data and the hawkish stance from the RBNZ support the Kiwi. 

The NZD/USD pair consolidates its gains near 0.6190 on Tuesday during the early Asian session. The worse-than-expected US ISM Manufacturing PMI data has dragged the Greenback lower and supported the pair. Investors await the US ISM Services PMI, which is due on Wednesday. On Friday, US employment data, including Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings will be in the spotlight. 

The US manufacturing sector had a second consecutive month of contraction in May and the 18th time in the last 19 months, the Institute for Supply Management (ISM) showed on Monday. The US Manufacturing PMI came in weaker than expected, dropping to 48.7 in May from 49.2 in April. Traders raise their bets on the US Federal Reserve (Fed) rate cuts this year, seeing nearly a 53% odds of a rate cut in September, up from 49% before the inflation report, according to the CME FedWatch tool.

On the Kiwi front, the encouraging Chinese Caixin Manufacturing PMI for May lifted the China-proxy New Zealand Dollar (NZD) as New Zealand is one of China’s leading trading partners. Apart from this, the hawkish stance from the Reserve Bank of New Zealand (RBNZ) further boosted the NZD, as RBNZ Deputy Governor Christian Hawkesby said in recent weeks that cutting interest rates is not part of the near-term discussion and the central bank needs to maintain rates for longer to ensure inflation returns to the 1-3% target range.