NZD/USD Holds Steady Above 0.5900 Despite Soft Chinese CPI Data

The New Zealand Dollar (NZD) continues to hold its ground, trading around 0.5930 during the early Asian session on Wednesday. Despite disappointing Chinese inflation data, the NZD maintains strength against the US Dollar (USD).

Chinese Inflation Data Weighs on Market Sentiment

Data from China’s National Bureau of Statistics revealed that the country’s Consumer Price Index (CPI) declined by 0.4% year-over-year in August, a larger drop than the market’s expectation of -0.2%. On a monthly basis, China’s CPI showed no change, compared to a 0.4% rise in July.

Additionally, China’s Producer Price Index (PPI) decreased by 2.9% year-over-year, slightly in line with expectations. While the weak CPI data points to sluggish demand in China, the NZD/USD pair remains firm, showing resilience despite the softer data.

US Fed Rate Cut Expectations Support NZD

Meanwhile, traders have increased bets on a potential rate cut by the US Federal Reserve (Fed) in its upcoming meeting this month. The market reacted to downward revisions in US job growth data, indicating a weaker-than-expected labor market. According to the CME FedWatch tool, there is a 92% chance of a 25-basis-point rate cut by the Fed in September, with an 8% chance of a larger 50-basis-point cut.

As traders await the US Producer Price Index (PPI) data for August later today, the NZD/USD pair stays buoyed, reflecting a cautious outlook on the Greenback amid dovish expectations for US monetary policy.

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