NZD/USD wobbles around 0.6050 while investors await Sino-US trade talks outcome

• NZD/USD trades well inside limited range around 0.6050 as investors look for US-China meeting minutes.
• The US inflation is expected to have grown at a faster pace in May.
• Investors seek cues about whether the RBNZ will reduce interest rates again in the July policy meeting.

The NZD/USD pair consolidates in a tight range around 0.6050 during European trading hours on Tuesday. The Kiwi pair trades sideways as investors shift sidelines with investors awaiting the outcome of trade talks between the United States (US) and China, which started on Monday in London.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades calmly around 99.00. Meanwhile, S&P 500 futures exhibit a sluggish performance during European trading hours, indicating a cautious market mood.

Though the White House has signaled that negotiations would go smooth and Washington will get access to rare earth minerals in large quantities, investors refrain from buying the optimism while waiting for a concrete breakthrough.

This week, the US Consumer Price Index (CPI) data for May will also be the key trigger for the next move in the US Dollar, which will be published on Wednesday. The CPI report is expected to show that inflationary pressures grew at a faster pace. Such a scenario would limit the Federal Reserve (Fed) from lowering interest rates.

Meanwhile, the New Zealand Dollar (NZD) is also exhibiting a sideways performance amid US-China trade talks. The impact of the US-China trade talks outcome is expected to be significant on the Kiwi dollar, given that the New Zealand (NZ) economy relies heavily on its exports to China.

On the domestic front, investors look for cues about whether the Reserve Bank of New Zealand (RBNZ) will cut interest rates in the policy meeting next month. In the May policy meeting, the RBNZ slashed its Official Cash Rate (OCR) by 25 basis points (bps) to 3.25%.

The RBNZ guided that the monetary expansion cycle will be deeper than what they had anticipated earlier, citing global economic risks and inflation is within the bank's target.