NZD/USD Down despite a weaker US dollar, affected by concerns related to China

• The NZD/USD softens around 0.5910 on Tuesday, cutting the profits of Monday
• China’s last rate cut feeds concerns about demand, weighing about the Kiwi linked to China
• The Kiwi remains above the 21 -day Ema but is still caught in a consolidation range

The New Zealand dollar (NZD) slides downward the US dollar (USD) on Tuesday, with the NZD/USD falling to 0.5910 in the first hours of American negotiation. The movement marks a slight recoil of the recovery of the previous day, since the operators react to the last cut of interest rates of China, which generated new concerns about slow growth in the region.

The Kiwi remains within a consolidation range but is struggling to build impulse as sales pressure arose after the Popular Bank of China (PBOC) reduced both of its main loan indices. The preferential interest rate for one year loans (LPR) – the reference for most commercial and domestic loans – was cut in 10 basic points up to 3.0%, while the five -year LPR, which influences the mortgage rates, was also reduced by 10 PBs up to 3.5%. The movement, aimed at stimulating domestic demand, highlighted persistent concerns about the slow recovery of China, weighing about currencies with close commercial ties with the Chinese economy, including the New Zealand dollar.

The latest economic data published on Monday showed that the Businessnz services PMI fell to 48.5 in April, marking a second consecutive month of contraction. While the weak services data highlights the winds against internal in progress, they were partially compensated by a strong rebound in production prices. Input prices of the first quarter increased 2.9%, while the output prices rose 2.1%, the highest profits since mid -2022. Although the markets still expect the New Zealand Reserve Bank (RBNZ) to cut the rates at 25 basic points later this month, the rebound of inflation can moderate the expectations of a more aggressive flexibility path.

Looking ahead, operators will focus their attention on a full national calendar. The New Zealand trade balance is expected to be published at the end of Tuesday, followed by the publication of the annual government budget on Thursday, which is expected to cut the base expenditure of 2025 to 1.3 billion NZ $ from 2.4 billion NZ $. The retail sales report on Friday will provide fresh update on consumer activity.

Meanwhile, the US dollar remains defensive, since the feeling weakened after the moody’s reduction of the US credit rating of AAA1. The movement was driven by growing concerns about the growing indebtedness of the US government and an expanding budget deficit.