Ella 
In early Asian trading on Tuesday, NZD/USD remained on the defensive around 0.6075. Weak Chinese economic data and a modest rebound in the US dollar (USD) continue to weigh on NZD/USD. U.S. June retail sales will be in focus on Tuesday. Focus will turn to New Zealand’s Consumer Price Index (CPI) inflation data due on Wednesday.
New Zealand’s second-quarter CPI inflation data is expected to fall more than the Reserve Bank of New Zealand expected, paving the way for an interest rate cut. Inflation is expected to rise 3.5% in the second quarter as a whole, from 4.0% in the previous quarter. Kelly Eckhold, chief economist at Westpac Banking Group, said that to start easing policy in August, we may need to see a significant unexpected decline in second-quarter inflation on July 17.
Elsewhere, China’s domestic gross production was weaker than expected on Monday, slightly weighing on NZD/USD. China is New Zealand’s main trading partner, so the performance of the Chinese economy tends to have an impact on NZD/USD. China’s economy expanded at an annual rate of 4.7% in the second quarter, compared with 5.3% growth in the first quarter, data from the National Bureau of Statistics showed on Monday.
In terms of the U.S. dollar, market participants expect the Federal Reserve to launch an easing cycle in September. Powell avoided giving a clear signal on when the Fed would begin cutting interest rates, despite a recent cooling in inflation. Financial markets are currently pricing in a September rate cut with a 100% chance of a cut of at least 25 basis points (bps) in the federal funds rate when the Federal Reserve meets on September 18.
