Weaker-than-expected Chinese retail sales and industrial production weigh on the Kiwi, while Fed rate hike bets rise.
The NZD/USD pair fell to around 0.5830 in Asian trading, pressured by disappointing Chinese economic data. China’s April retail sales grew just 0.2% year-over-year, missing the 2.0% forecast and slowing sharply from March’s 1.7%. Industrial production also underperformed, rising 4.1% versus expectations of 5.9% and a prior 5.7% gain.
The data reinforced concerns about China’s economic recovery, dragging down the Kiwi, which is sensitive to Chinese demand. Meanwhile, the USD strengthened as traders increased bets on a Federal Reserve rate hike by year-end. Markets now price a 48.4% chance of at least a 25 basis points increase in December, up from 14.3% a week ago.
Fed officials have signaled a focus on controlling inflation, with some not ruling out further hikes if price pressures persist. The shift in expectations supported the USD, adding to the NZD’s decline.