NZD/USD softens below 0.6000, eyes on US-China trade tensions

• NZD/USD loses ground to around 0.5985 in Friday's Asian session. 
• China told the US to cancel all unilateral tariffs if it wants talks. 
• China's Finance Ministry said current world economic growth momentum was insufficient due to tariff threats and trade wars. 

The NZD/USD pair edges lower to around 0.5985 during the Asian session on Friday, pressured by the firmer Greenback. The lack of progress toward defusing the US-China trade deal exerts some selling pressure on the China-proxy Kiwi. The final reading of Michigan Consumer Sentiment is due later on Friday.

US President Donald Trump said late Thursday that his administration was talking with China on trade. Meanwhile, China said that no negotiations had been held on the economy and trade, and it urged the US to lift all unilateral tariff measures if it really wished to resolve the issue. Concerns over trade tensions between the world's two largest economies could undermine the New Zealand Dollar (NZD), as China is a major trading partner to New Zealand. 

The rising bets that the Reserve Bank of New Zealand (RBNZ) will lower its Official Cash Rate (OCR) at the May meeting might contribute to the NZD's downside. The markets fully expect the RBNZ to cut its 3.5% OCR by 25 basis points (bps) in May, with a further reduction to 2.75% by year-end.

China's Finance Ministry said on Friday that the current world economic growth momentum was insufficient, with tariff and trade wars further impacting economic and financial stability. Meanwhile, People's Bank of China (PBOC) Governor Pan Gongsheng noted that economic fragmentation and trade tensions continue to disrupt the industrial supply chain and weaken the momentum of global growth. However, any positive developments surrounding Chinese stimulus measures could help limit the Kiwi's losses in the near term.