NZD/USD holds above 0.5900 on weaker US Dollar, renewed US-China tensions might cap its upside

• NZD/USD drifts higher to around 0.5935 in Wednesday's early Asian session, adding 0.18% on the day.
• New Zealand's Trade Surplus climbs to NZ$1,426 million in April vs. NZ$794 million prior.
• The concerns over the US economy could drag the US Dollar lower broadly. 

The NZD/USD pair attracts some buyers to around 0.5935 during the early Asian session on Wednesday, bolstered by a weaker US Dollar (USD). The Federal Reserve's (Fed) Thomas I. Barkin is scheduled to speak later on Wednesday.

Data released by  Statistics New Zealand on Wednesday showed that the country's trade surplus soared to NZ$1,426 million in April versus NZ$794 million prior, spurred by a robust performance in dairy and fruit exports. This figure came in above the market consensus of NZ$500 million. Despite this monthly win, there's still a looming trade deficit of NZ$4.81 billion YoY in April. 

Under the deal reached in Geneva, the US lowered its tariff on Chinese goods from 145% to 30%, while China cut its rate from 125% to 10%. However, tariff unpredictability remains in place for the time being. China's Commerce Ministry said early Wednesday that US measures on China's advanced chips are 'typical of unilateral bullying and protectionism.' Chinese authorities urged the US to immediately correct its erroneous practices. 

Any signs of escalating trade tensions between the US and China could exert some selling pressure on the China-proxy Kiwi, as China is a major trading partner of New Zealand. 

Meanwhile, the US Dollar remains on the defensive, as sentiment weakened after Moody's downgrade of the US credit rating from Aaa to Aa1. This raised questions about the economic health of the world's largest economy. "The Moody's downgrade was the catalyst earlier pushing yields higher and the dollar lower. Now yields have come off those highs and the dollar is still lower," said Vassili Serebriakov, currency strategist at UBS in New York.