- The NZD/USD fights after the publication of disappointing inflation data on Monday.
- The New Zealand consumption price index rose 2.7% year -on -year in the second quarter, compared to the expected increase of 2.8%.
- The Popular Bank of China decided to maintain its preferential rate of loans to a year without changes in 3% in July.
The NZD/USD lost ground after the disappointing New Zealand inflation data for the second quarter, quoting around 0.5940 during the Asian hours of Monday. Operators can adopt caution before the New Zealand trade balance data, which will be published on Tuesday. The pair remains moderate after the Popular Bank of China (PBOC) decided to keep its preferential loan rates (LPR) for a year and five years without changes in 3.00% and 3.50%, respectively. It is important to note that China and New Zealand are nearby commercial partners.
New Zealand inflation data, softer than expected, have increased hope that the New Zealand Reserve Bank (RBNZ) maintains the official cash rate at 3.25% at the August meeting. The consumer price index increased a 2.7% year -on -year in the second quarter, compared to the 2.5% increase observed in the first quarter. The market was waiting for a 2.8% increase in the reported period. The quarterly IPC was reduced by 0.5% in the second quarter, compared to the previous 0.9% and below the 0.6% market consensus.
In addition, the New Zealand dollar (NZD) also faces challenges amid the prevailing commercial tensions between the United States (USA) and China, since China is an important commercial partner of New Zealand. August 12 will be the deadline for China to finish a long -term tariff agreement with the US, after a preliminary agreement last month to end the tariffs.
China’s Minister of Commerce, Wang Wentao, declared on Friday that China wants to stabilize the commercial relationship with the USA. Wentao also added that recent conversations in Europe showed that there is no need for a tariff war, urging the US to act in a way according to a superpower.
However, the NZD/USD pair won ground as the US dollar (USD) fought after the moderate comments of an official of the US Federal Reserve (Fed). The governor of the Fed, Christopher Waller, said last week that the labor market is well in general, but less in the private sector. The Fed should reduce its interest rate objective at the July meeting, citing growing economic risks, Waller added.
Economic indicator
Decision on the interest rate of the PBOC
The Monetary Policy Committee (MPC) of Banco Popular de China (PBOC) celebrates a quarterly scheduled meetings. However, China’s reference interest rate – the preferential loan rate (LPR), a price reference for bank loans – is set every month. If the PBOC provides high inflation (aggressive) increases interest rates, which is bullish for the RenminBi (CNY). Similarly, if the PBOC sees that inflation in the Chinese economy is decreasing (Dovish) and cuts or keeps interest rates without changes, is bassist for the CNY. Even so, China’s currency does not have a floating exchange rate determined by the markets and their value against the US dollar is mainly fixed by the PBOC daily.
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Last publication:
Lun Jul 21, 2025 01:15
Frequency:
Irregular
Current:
3%
Dear:
3%
Previous:
3%
Fountain:
The People’s Bank of China
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
