NZD/USD softens to below 0.5950 amid cautious trades

• NZD/USD weakens to near 0.5925 in Thursday's Asian session, down 0.42% on the day. 
• The US PPI was flat in June, below the forecast. 
• The upbeat Chinese GDP data could support the China-proxy Kiwi, but the RBNZ's dovish tone might cap its upside. 

The NZD/USD pair attracts some sellers to around 0.5925 during the Asian trading hours on Thursday. The cautious trades and the prospect of the US Federal Reserve (Fed) maintaining its current interest rates underpin the US Dollar (USD) against the New Zealand Dollar (NZD). The US June Retail Sales will take center stage later on Thursday. 

Data released by the US Bureau of Labor Statistics on Wednesday revealed that the US Producer Price Index (PPI) was unexpectedly unchanged in June. This figure came in below the market consensus of 0.2%. Meanwhile, the PPI ex food & energy rose by 2.6% YoY in June versus 3.0% prior, softer than the expectations of 2.7%. 

Traders expect the US Federal Reserve (Fed) will leave its benchmark overnight interest rate unchanged in the 4.25%-4.50% range at its July policy meeting due to the tariff uncertainty triggered by US President Donald Trump. Fed officials said they remain cautious about the impact tariffs will have on inflation and believe the US economy is in the right position now that they can wait to see the impacts before making the next move.  

China has avoided a sharp economic slowdown due to policy support, which might support the China-proxy Kiwi, as China is a major trading partner of New Zealand. However, the dovish stance of the Reserve Bank of New Zealand (RBNZ) could weigh on the NZD. The RBNZ is widely expected to deliver more rate cuts in the upcoming meetings, driven by the subdued activity in both the manufacturing and services sectors.