NZD/USD wavers below 0.5750 despite hot NZ inflation, China data

• The New Zealand Dollar remains trapped within a narrow range below 0.5750.
• New Zealand CPI accelerated to a 3% year-to-year pace in Q3, but the positive impact on the NZD has been short-lived.
• Strong China's GDP, Industrial Production, and Retail Sales have provided additional support to the Kiwi.

The New Zealand Dollar's recovery attempt seen after the release of hotter New Zealand inflation figures and upbeat Chinese data has been limited below 0.5750, and the pair trimmed gains shortly afterwards, returning to 0.5725 during Monday's European session.

Price pressures accelerated to a 3% year-on-year rate in New Zealand in the third quarter, their highest level in 15 months, from 2.7% in Q2. Quarter-on-quarter, the CPI increased 1%, twice the 0.5% growth seen in the previous quarter. Stats New Zealand pointed to the 11.3% increase in electric energy prices to explain the hotter inflation levels, although higher rents and food prices also contributed to the final reading.

Strong inflation, weak growth, complicates RBNZ's work

These figures might pose a headache to the Reserve Bank of New Zealand (RBNZ), which cut rates by 50 basis points against expectations earlier in October amd hinted at further easing in an effort to boost an ailing economic growth. This is the main reason keeping the pair from appreciating further on Monday.

Furthermore, data from China revealed that the Gross Domestic Product increased beyond expectations in the third quarter, with Industrial Production and Retail Sales showing resilience. China is New Zealand's major trading partner, and these figures have provided additional support to the Kiwi.

Beyond that, signs of de-escalating tensions between the US and China have improved market sentiment, weighing on the safe-haven Dollar. Investors, however, maintain a cautious tone, and the US Dollar's downside attempts remain limited so far.