NZD/USD trades higher near 0.5950 ahead of potential US-China trade talks

• NZD/USD rebounds amid optimism over potential easing of US-China trade tensions.
• New Zealand PM Luxon highlighted that although financial markets experienced declines in early April, they have since shown partial recovery.
• The US Dollar may regain momentum as the Federal Reserve signals a more cautious stance on monetary policy.

The NZD/USD pair is trading near 0.5970 during Thursday's Asian session, rebounding after a more than 1% decline in the previous session. The recovery is driven by optimism surrounding potential de-escalation in US-China trade tensions.

US Treasury Secretary Scott Bessent is set to meet with China's top economic official in Switzerland on Saturday in a bid to revive stalled trade talks. Additional support for the NZD came from China--New Zealand's largest trading partner--as Beijing stepped up stimulus efforts to boost economic growth in the face of trade-related challenges.

New Zealand Prime Minister Christopher Luxon commented on Thursday that while financial markets saw a sharp deterioration in early April, they have since partially recovered, though volatility persists. Luxon emphasized the importance of the global environment but expressed confidence in New Zealand's economic recovery.

Meanwhile, Reserve Bank of New Zealand (RBNZ) Governor Christian Hawkesby warned that the country remains vulnerable to global trade disruptions stemming from US tariff policies. Hawkesby highlighted weak labor market data and ongoing global market dysfunctions as major concerns.

The US Dollar Index (DXY) is hovering around 99.70 at the time of writing, with potential to regain strength amid cautious signals from the Federal Reserve (Fed). On Wednesday, the Fed left interest rates unchanged at 4.25%-4.50%, but noted growing risks from inflation and unemployment, adding to economic uncertainty. According to the CME FedWatch Tool, markets still anticipate a 25-basis-point rate cut in July.