NZD/USD recovers some lost ground near 0.5980 following Chinese data

• NZD/USD attracts some intraday buyers, remains below the 0.6000 barrier on Tuesday.
• Unexpected rate cuts by the Chinese central bank fuel fears about China's deteriorating economic outlook.
• Chinese Retail Sales YoY (Jul) came in at 2.5% vs. 4.8% expected; Industrial Production fell to 3.7% vs. 4.5% expected.
• Investors await US Retail Sales, the Reserve Bank of New Zealand (RBNZ) rate decision.

The NZD/USD pair recovers some lost ground and snaps five-day losing streaks below the 0.6000 barrier during the Asian session on Tuesday. The pair currently trades around 0.5980, up 0.04% for the day.

According to a Reuters poll, the majority of analysts expect the Reserve Bank of New Zealand (RBNZ) to maintain rates at 5.50%, a 14-year high, for the second consecutive meeting on Wednesday. The New Zealand Dollar could extend its decline if the RBNZ takes a dovish stance.

On the other hand, unexpected rate cuts by the People's Bank of China (PBOC) fuel fears about China's deteriorating economic outlook and might limit the rebound in the Kiwi. The People's Bank of China (PBOC) cut the one-year Medium-term Lending Facility (MLF) rate from 2.65% to 2.50% on Tuesday.

Earlier on Tuesday, the National Bureau of Statistics (NBS) reported that Chinese Retail Sales for July came in at 2.5% YoY compared to 4.8% expected and 3.1% previously, while the country's Industrial Production fell to 3.7% YoY compared to 4.5% expected and 4.1% previously. The downbeat Chinese data adds more concern about the pace of China's post-pandemic recovery and exerts pressure on the Chinese proxy currencies, the Australian Dollar and the Kiwi.

On the US Dollar front, investors will take cues from US Retail Sales due later in the American session. Market participants anticipate that the Federal Reserve (Fed) will keep the interest rate unchanged in its September meeting as US inflation remains moderate and in line with the central bank's target of 2%. However, the odds for an additional rate hike of 25 basis points (bps) increased to almost 40% in its November meeting.

Looking ahead, market participants will keep an eye on the US Retail Sales and FOMC minutes due on Tuesday and Thursday, respectively. The key event for the Kiwi will be the RBNZ Interest Rate Decision scheduled for Wednesday. The data will be critical for determining a clear movement for the NZD/USD pair.