NZD/USD holds gains above 0.5750 ahead of Trump-Xi meeting

• NZD/USD remains stronger as ANZ Business Confidence rose to 58.1 in October from 49.6 prior.
• The NZD gains support from improved market sentiment, driven by optimism surrounding a potential US-China trade deal.
• Fed Chair Powell noted that another rate cut in December is far from certain.

NZD/USD recovers its recent losses from the previous session, trading around 0.5770 during the Asian hours on Thursday. The pair appreciates as the New Zealand Dollar (NZD) receives support following ANZ Business Confidence, which surged to 58.1 in October from 49.6 in the previous month, marking the highest reading since February. Meanwhile, Activity Outlook improved to 44.6 for the same month, from 43.4 prior.

China's Premier Li Qiang stressed the need to balance development with security, strengthen risk-prevention mechanisms, and safeguard long-term growth through policy preparedness and systemic stability. Any shift in China's economic conditions could also affect the New Zealand Dollar, given the close trade ties between China and New Zealand.

The NZD is also supported by improved market sentiment, fueled by optimism over the potential for a trade deal between the United States (US) and China. US President Donald Trump and Chinese President Xi Jinping are set to meet later today in South Korea.

The Federal Reserve (Fed) delivered a widely anticipated 25 basis point interest rate cut on Wednesday. This marks the second straight interest rate cut from the Fed, albeit with some policymakers making a mental note of a general increase in some inflationary pressures through the second half of the year, but not enough to deter another leg down in interest rates.

The US Dollar (USD) gained ground after the Fed acknowledged it would continue to ease back on Quantitative Easing (QE) practices, with the process of drawing down the Fed's mortgage-backed asset balance sheet into long-term Treasuries by December 1.

Fed Chair Jerome Powell stated at the post-meeting press conference that the available data indicate little change in the outlook for employment and inflation since the September meeting. Powell noted that the government shutdown will weigh on economic activity while it continues, but should reverse once it ends. He added that another rate cut in December is far from certain, emphasizing that the path forward remains uncertain.