The NZD/USD pair is trading lower near 0.6075 during Tuesday’s Asian session, weighed down by weaker Chinese economic data and a modest US Dollar (USD) rebound. Investors are eagerly anticipating the release of US Retail Sales figures for June and New Zealand’s second-quarter Consumer Price Index (CPI) data on Wednesday.
New Zealand CPI and Rate Cut Expectations
Expectations are growing that the Reserve Bank of New Zealand (RBNZ) will soon initiate interest rate cuts, as Q2 CPI inflation is anticipated to undershoot the central bank’s forecasts. A significant slowdown in inflation could pave the way for an August rate cut, according to Westpac’s chief economist Kelly Eckhold.
Chinese Economic Data Weighs on Kiwi
Weaker-than-expected Chinese GDP data for Q2 also contributed to the Kiwi’s decline, as China is a major trading partner for New Zealand. The slower growth in the world’s second-largest economy has raised concerns about global demand and weighed on risk-sensitive currencies like the NZD.
Fed Rate Cut Expectations Remain
Despite Fed Chair Powell’s cautious remarks, market participants remain confident that the Fed will begin its easing cycle in September, with a 100% probability of at least a 25 basis point cut priced in.
Key Points:
- NZD/USD trades lower ahead of US Retail Sales and NZ CPI data.
- Weaker Chinese economic data adds pressure on the Kiwi.
- NZ CPI could trigger RBNZ rate cuts if it falls below expectations.
- Fed rate cut expectations remain firm despite Powell’s cautious stance.
