NZD/USD Slides Toward 0.5900 After Weaker-Than-Expected Chinese Data

NZD/USD Slides Toward 0.5900 After Weaker-Than-Expected Chinese Data

The NZD/USD pair fell toward 0.5900, trading around 0.5915 during the Asian session on Friday, after the release of softer-than-expected Chinese economic data weighed on the New Zealand Dollar (NZD). The Kiwi, often seen as a proxy for Chinese economic performance, came under pressure as traders reacted to disappointing retail and industrial figures from China.

According to the National Bureau of Statistics (NBS), China’s Retail Sales rose 3.7% year-over-year in July, missing expectations of 4.6% and lower than the 4.8% growth in June. Industrial Production also slowed to 5.7% YoY, down from 6.8% in June, further signaling cooling momentum in the world’s second-largest economy. Though still better than the extremely low forecast of 2.7%, the data reinforced concerns over slowing domestic demand and weak recovery post-COVID.

As China is New Zealand’s largest trading partner, weaker Chinese growth outlook tends to hurt demand for New Zealand exports, thereby negatively impacting the NZD. The pair’s downward movement reflects renewed concerns over the health of the Chinese economy, which could have broader implications across Asia-Pacific currencies.

On the other hand, the US Dollar (USD) remains somewhat supported by stronger-than-expected US economic data, including a robust Producer Price Index (PPI) and Initial Jobless Claims. However, despite these upbeat numbers, investors continue to price in a Federal Reserve rate cut at the September 17 meeting, according to LSEG market data.

This dovish Fed outlook is helping to limit the downside in the NZD/USD pair, as softer rate expectations generally weaken the USD. Traders will now closely monitor upcoming US July Retail Sales figures and the University of Michigan Consumer Sentiment report, both due later on Friday, for further direction.

Until then, NZD/USD may remain under mild pressure but supported above key levels if Fed-related sentiment continues to lean dovish.