NZD/USD rebounds slightly from one-week low, still deep in the red around mid-0.5800s

• NZD/USD drops to a one-week low following the release of softer Services PMI from China.
• US-China trade war fears and a modest USD uptick further contribute to the intraday fall.
• Traders look forward to Fed Chair Jerome Powell’s speech for some meaningful impetus.

The NZD/USD pair attracts fresh sellers following the previous day's good two-way price move and drops to a one-week low during the Asian session on Wednesday. Spot prices, however, manage to rebound a few pips in the last hour and currently trade around mid-0.5800s, down over 0.50% for the day.

A private survey released earlier today showed that China’s services sector grew less than expected in November, which adds to worries about the fragile recovery in the world's second-largest economy. In fact, China's Caixin Services PMI unexpectedly fell to 51.5 in November from 52.0 in the prior month. This comes on top of new US export curbs on China and concerns about US President-elect Donald Trump's impending tariffs, which, in turn, weigh heavily on antipodean currencies, including the Kiwi. 

The US Dollar (USD), on the other hand, continues to draw support from the upbeat US data released on Tuesday, which eased fears of a significant slowdown in the labor market. Adding to this, expectations that Trump's expansionary policies will boost inflation might force the Federal Reserve (Fed) to take a cautious stance on cutting rates. This, along with persistent geopolitical uncertainty continues to underpin the safe-haven Greenback and exerts additional downward pressure on the NZD/USD pair.

The USD bulls, however, seem reluctant to place aggressive bets and opt to move to the sidelines ahead of Fed Chair Jerome Powell's speech later this Wednesday. Apart from this, the release of the closely-watched US Nonfarm Payrolls (NFP) report on Friday should offer fresh cues about the Fed's rate-cut path. This, in turn, will play a key role in influencing the near-term USD price dynamics. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the NZD/USD pair is to the downside.