NZD/USD rises to near 0.5550 following RBNZ interest rate decision

• NZD/USD edges higher after the Reserve Bank of New Zealand lowered interest rates by 25 basis points, as widely expected.
• The rate cut reflects the RBNZ's response to easing inflation, slowing growth, and emerging signs of labor market strain.
• The US Dollar faced challenges after Trump signaled a willingness to engage in trade negotiations.

The NZD/USD pair edges higher after the Reserve Bank of New Zealand (RBNZ) cut interest rates by 25 basis points (bps), in line with market expectations. The pair is trading around 0.5540 during Wednesday's Asian session. The central bank's decision comes amid softening inflation, slowing economic growth, and early signs of labor market weakness. There is growing speculation that intensifying global trade tensions could prompt a deeper 50 bps cut, with markets pricing in the potential for up to 100 bps of additional easing in 2025.

The NZD/USD pair also found support following comments from US President Donald Trump, who expressed openness to negotiations with trade partners--sparking hopes for a potential de-escalation in global trade disputes. US Treasury Secretary Scott Bessent added that nearly 70 countries have reached out to the White House to discuss tariffs.

However, persistent US- China trade tensions continue to weigh on sentiment, particularly given New Zealand's strong trade ties with China. Trump recently threatened to impose an additional 50% tariff on Chinese imports unless Beijing lowers its duties on US goods. In response, China condemned the move as "blackmail" and pledged to defend its economic interests.

Meanwhile, the US 10-year Treasury yield has climbed to around 4.37%, signaling stronger investor demand for returns amid the uncertainty surrounding global trade dynamics.

Looking ahead, traders will closely monitor this week's US inflation data, which could significantly shape the outlook for future rate cuts. Additionally, attention will turn to the release of the FOMC Meeting Minutes later on Wednesday for further insight into the Federal Reserve's policy stance.