NZD/USD advances to near 0.5950 as US Dollar weakens on soft inflation data

• NZD/USD appreciated as April's figures mark a new three-year low for annual headline inflation.
• US President Donald Trump described the relationship with China as excellent.
• The New Zealand Dollar may continue to benefit as the US and China agreed to significantly reduce tariffs.

The NZD/USD pair advanced for the second consecutive session, hovering around 0.5940 during Wednesday's Asian trading hours. The pair strengthened as the US Dollar (USD) came under pressure following softer-than-expected US inflation figures. Market participants now await the release of the US Producer Price Index (PPI) and the University of Michigan's Consumer Sentiment Survey, both scheduled for later this week.

US Consumer Price Index (CPI) data showed a 2.3% year-over-year increase in April, slightly below both the 2.4% rise recorded in March and market expectations. Core CPI, which excludes volatile food and energy prices, rose by 2.8% annually, matching the prior month and consensus estimates. On a monthly basis, both headline and core CPI rose by 0.2% in April.

US President Donald Trump told Fox News that he is working to expand access to Chinese markets and described US-China relations as "excellent." He also expressed openness to direct talks with President Xi Jinping to pursue a broader trade deal.

Commodity-linked currencies like the New Zealand Dollar (NZD) may continue to benefit as the US and China reportedly reached a preliminary agreement to significantly reduce tariffs. Under the proposed deal, US tariffs on Chinese goods would fall from 145% to 30%, while China would reduce tariffs on US imports from 125% to 10%--a move widely seen as a step toward easing trade tensions.

New Zealand saw Visitor Arrivals drop by 8.4% year-on-year to 311,800 in March 2025, marking the second straight monthly decline. Meanwhile, Electronic Card spending remained flat at NZD 6.46 billion in April, on a seasonally adjusted basis. Traders are exercising caution ahead of New Zealand's upcoming food inflation data for April, following a 14-month high recorded in March.