The NZD/USD pair remains firm near 0.5930 during Wednesday’s Asian session, with the New Zealand Dollar holding its ground against the US Dollar despite softer-than-expected Chinese inflation figures. Traders now shift focus to the upcoming US Producer Price Index (PPI) data for August, due later in the day.
Fresh data from China’s National Bureau of Statistics showed that the Consumer Price Index (CPI) fell 0.4% year-on-year in August, after holding flat in July. The result was weaker than market expectations of a 0.2% drop. On a monthly basis, CPI remained unchanged, compared to a 0.4% rise previously. Meanwhile, the Producer Price Index (PPI) contracted 2.9% YoY in August, following July’s 3.6% fall and broadly in line with forecasts.
Despite these signals of sluggish Chinese demand, the Kiwi Dollar held firm, reflecting resilience to the disappointing data. China’s CPI is often viewed as a gauge of economic health, and persistent weakness highlights ongoing challenges in domestic consumption.
At the same time, US monetary policy expectations continue to dominate sentiment. Markets increased their bets on a Federal Reserve rate cut in September after revised government data showed nearly one million fewer jobs were created between April 2024 and March 2025 than initially reported. This points to a much weaker labor market backdrop.
According to the CME FedWatch Tool, markets are now pricing in around a 92% probability of a 25 basis point cut at the September Fed meeting, with an 8% chance of a larger 50 bps reduction.
