NZD Slips Below 0.59 Amid China's Economic Slowdown

The New Zealand Dollar has edged lower below 0.5900 against the US Dollar due to China's slowing economy in July. Statistics Bureau spokesperson Fu Linghui attributed the slowdown to geopolitical pressure abroad and high temperatures domestically.

China's economic loss of momentum dragged the Kiwi lower, as China is a major trading partner of New Zealand. However, lower bets for a US Federal Reserve rate hike could support the pair, with markets now pricing in a near-65% chance of a hold after softer consumer price inflation and weaker retail sales.

Commerzbank's Volkmar Baur notes that it seems unlikely the Reserve Bank of New Zealand will raise interest rates for a second consecutive time following July's hike. Although the data argue for a pause, Baur expects the RBNZ to retain a hawkish tone given ongoing Middle East risks.