NZD/USD softens below 0.5650 on stronger US economic data

• NZD/USD softens to around 0.5635 in Wednesday's early Asian session. 
• The stronger US data suggested the Fed is likely to slow the easing cycle. 
• Investors will monitor how aggressive Trump's tariff plans could be when he takes office.

The NZD/USD pair trades with mild losses near 0.5635 during the early Asian session on Wednesday. The upbeat US Services Purchasing Managers Index (PMI) for December suggested that the Federal Reserve (Fed) will likely slow the pace of its easing cycle, supporting the US Dollar (USD). Later on Wednesday, the Minutes of the Federal Open Market Committee (FOMC) will be in the spotlight. 

The services sector activity in the United States accelerated in December. Data released by the Institute for Supply Management (ISM) showed that Services PMI increased to 54.1 in December from 52.1 in November. This reading came in stronger than the estimation of 53.3. 

Meanwhile, US job openings unexpectedly increased in November, although hiring slowed during the month. US JOLTS Job Openings rose to 8.09 million in November versus 7.83 million prior and came in above the market consensus of 7.7 million.

The reports indicated a generally stable jobs market and a still robust services sector, which might convince the Fed to slow the pace of rate cuts, lifting the Greenback. According to the CME FedWatch tool, the US rate futures market has priced in a 93.5% chance of a pause in rate cuts this month. 

Investors will monitor how aggressive President-elect Donald Trump's tariff policies could be when he takes office. Analysts believe that if US tariffs are broadly lower than Trump promised on the campaign trail and aimed only at "critical" sectors, then the outlook for global growth should improve and the USD should weaken. Additionally, the supportive measures from China could boost the Kiwi as China is a major trading partner for New Zealand.