NZD/USD retreats below 0.5850 weighed by a cautious market mood

• The US Dollar prevails in a cautious market, with renewed debt concerns weighing on risk appetite.
• The New Zealand Dollar has lost more than 1% after pulling back from levels past 0.5900 on Monday.
• Upbeat services activity data from China failed to cheer NZD buyers earlier on Wednesday.

The US dollar continues to outperform its main peers on Wednesday, as debt fears return to the market, to the detriment of risk-sensitive currencies like the New Zealand Dollar, which has depreciated by more than 1% from Tuesday's highs.

The Kiwi Dollar was rejected at two-week highs around 0.5915 earlier this week and has returned below 0.5850 in Wednesday's early European trading session, with bears aiming for Tuesday's lows, near 0.5835.

Fears of a global debt crisis are boosting safe-haven assets

Renewed concerns about the mounting fiscal deficits in the world's major economies have triggered a sell-off in government bonds, pushing long-term yields higher globally. Fears about another debt crisis have crushed risk appetite, triggering a rush to safety that is boosting the USDollar and Gold.

The Greenback was undaunted by the downbeat US ISM Manufacturing PMI figures, which showed that business activity in the sector contracted for the sixth straight month in August.

The dismal market mood has offset the positive services activity data from China, New Zealand's leading trading partner. The Caixin Services PMI has jumped to a 15-month high of 53.0 in August, from 52.6 in July, improving the outlook of the world's second largest economy.

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