NZD/USD holds losses around 0.5950 following PBoC decision, New Zealand’s CPI data

NZD/USD struggles after the release of disappointing inflation data on Monday.
New Zealand’s Consumer Price Index climbed 2.7% YoY in Q2, against the expected rise of 2.8%.
The People’s Bank of China decided to leave its one-year Loan Prime Rate unchanged at 3% in July.

Akhtar Faruqui FXStreet

NZD/USD lost ground following the disappointing New Zealand inflation data for the second quarter, trading around 0.5940 during the Asian hours on Monday. Traders may adopt caution ahead of the New Zealand Trade Balance data, due on Tuesday. The pair remains subdued after the People’s Bank of China (PBoC) decided to leave its one- and five-year Loan Prime Rates (LPRs) unchanged at 3.00% and 3.50%, respectively. It is important to note that China and New Zealand are close trade partners.

The softer-than-expected New Zealand inflation data has raised hopes that the Reserve Bank of New Zealand (RBNZ) will hold the official cash rate at 3.25% in the August meeting. Consumer Price Index (CPI) rose 2.7% year-over-year in the second quarter, compared with the 2.5% increase seen in the first quarter. The market expected a 2.8% rise in the reported period. The quarterly CPI eased by 0.5% in Q2, against the previous 0.9% and below the market consensus of 0.6%.

Moreover, the New Zealand Dollar (NZD) also faces challenges amid prevailing trade tensions between the United States (US) and China, given that China is a major trading partner of New Zealand. August 12 will be the deadline for China to finalize a long-term tariff agreement with the US, after a preliminary deal last month to end increasing tariffs.

China’s Commerce Minister Wang Wentao stated on Friday that China wants to stabilize the trade relationship with the US. Wentao also added that recent talks in Europe showed there was no need for a tariff war while urging the US to act in a manner befitting of a superpower.

However, the NZD/USD pair gained ground as the US Dollar (USD) struggled following dovish comments from a US Federal Reserve (Fed) official. Fed Governor Christopher Waller noted last week that the labor market is doing fine overall but less so in the private sector. The Fed should reduce its interest rate target at the July meeting, citing mounting economic risks, Waller added.

Economic Indicator

PBoC Interest Rate Decision

The People’s Bank of China’s (PBoC) Monetary Policy Committee (MPC) holds scheduled meetings on a quarterly basis. However, China’s benchmark interest rate – the loan prime rate (LPR), a pricing reference for bank lending – is fixed every month. If the PBoC forecasts high inflation (hawkish) it raises interest rates, which is bullish for the Renminbi (CNY). Likewise, if the PBoC sees inflation in the Chinese economy falling (dovish) and cuts or keeps interest rates unchanged, it is bearish for CNY. Still, China’s currency doesn’t have a floating exchange rate determined by markets and its value against the US Dollar is fixed mainly by the PBoC on a daily basis.

EUR/USD looks to stabilize near 1.1600 as focus shifts to US data

EUR/USD is looking to stabilize near 1.1600 in the European session on Wednesday as traders breathe a sigh of relief before the top-tier US ADP jobs and ISM Services PMI data. A pause in the US Dollar uptrend helps the pair's recovery, but surging energy prices due to the Iran war will likely remain a drag.

GBP/USD stays weak near 1.3350 as USD preserves gains

GBP/USD stays in the red below 1.3350 in the European session on Wednesday. Escalating conflict in the Middle East keeps the "flight to safety" theme intact, supporting the US Dollar against the Pound Sterling. Traders will take more cues from the US ADP Employment and ISM Services Purchasing Managers Index reports, which are due later on Wednesday.

Gold retains positive bias amid sustained safe-haven flows and modest USD pullback

Gold maintains its offered tone through the first half of the European session, though it lacks follow-through and remains below the $5,200 mark. Investors remain concerned about a prolonged conflict in the Middle East and its impact on the global economy amid an already uncertain environment.

Bitcoin, Ethereum and Ripple struggle for direction as consolidation persists

Bitcoin, Ethereum and Ripple prices trade with a cautious tone at the time of writing on Wednesday as upside momentum continues to fade across the broader crypto market. BTC remains within a parallel channel, ETH struggles below key resistance, while XRP remains fragile within a descending channel. These top three cryptocurrencies by market capitalization continue to struggle to establish a directional bias amid the consolidation phase.

Asian stocks fall as South Korea’s KOSPI slumps over 10%

Asian equities drop on Middle East tensions; the MSCI Asia Pacific Index falls up to 4%. South Korea’s KOSPI fell 10.71% near 5,170, with the Korean Won weakened past 1,500 per dollar.

Solana Price Forecast: SOL consolidation near resistance as ETF inflows offer mild support

Solana price is facing slight rejection as it approaches the upper boundary of the consolidation range at around $88 on Wednesday. Institutional demand is strengthening as spot Exchange Traded Funds recorded two consecutive inflows so far this week.