NZD Reaches Fresh Two-Month Highs Amid Weak China Data and Dovish Fed Bets

The New Zealand Dollar (NZD) has reached fresh two-month highs against the US Dollar (USD), breaking past 0.5900 for the first time since early June. Despite weak data from China, Kiwi Dollar bulls remain confident in their purchases of the pair.

The Chinese Bureau of Statistics released downbeat data on Monday, showing Industrial Production growth slowing to 4.5% year-over-year in July, below market expectations of a 5% growth. Retail Sales also slowed to a 0.6% yearly growth in July, less than half the 1.5% growth expected.

The weak US Dollar is drawing support from a dovish repricing of the Federal Reserve (Fed) monetary policy, with analysts at ING highlighting that Friday's softer US retail sales data has added to the case against raising rates in September. Looking ahead, ING experts argue that the minutes from the 29 July FOMC meeting will be key.

The NZD is crawling higher against a weaker USD, which has depreciated amid shrinking bets of a Fed rate hike in September. The soft US data calendar this week makes it hard to see much changing, and the focus remains on the US central bank's monetary policy decisions.