NZD/USD slips below 0.5900 after weak China July data

NZD/USD edged below 0.5900 on Monday after China, New Zealand's largest trading partner, reported weaker-than-expected July economic data. Industrial production rose 5.1% year-on-year, below a 5.2% forecast and June's 5.3%, while retail sales increased 2.7% against expectations of 3.1% and fixed asset investment grew 3.6% in the first seven months of the year versus a projected 3.9%. The pair fell to 0.5875 before stabilizing around 0.5890, renewing concern about China's recovery and demand for New Zealand dairy and agricultural exports. A broadly firmer U.S. Dollar, supported by expectations that the Federal Reserve will keep interest rates higher for longer, also weighed on the risk-sensitive New Zealand Dollar. Commerzbank analysts said China's weaker growth could prompt additional stimulus and pressure the yuan by widening interest-rate differentials with the United States, although the People's Bank of China (PBOC, China's central bank) could limit excessive depreciation through a firmer daily fixing, tighter offshore yuan liquidity and countercyclical factors. Traders are watching Chinese and U.S. data, policy signals and comments from New Zealand officials for the next move.

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