New Zealand Dollar trades sideways after mixed China data, three-year high US inflation

NZD/USD trades around 0.5815 at the time of writing on Wednesday, little changed on the day, as investors digest a series of macroeconomic releases from China and the United States (US).

The pair remains broadly stable following Chinese data released during the Asian session. According to the National Bureau of Statistics of China, the Consumer Price Index (CPI) declined by 0.1% MoM in May, compared with a 0.3% increase previously. Meanwhile, the Producer Price Index (PPI) rose by 3.9% YoY, above market expectations of a 3.8% increase. These mixed figures failed to provide meaningful support to the New Zealand Dollar (NZD), which is often viewed as sensitive to developments in the Chinese economy.

Market attention has now shifted to the United States, where inflation continues to accelerate. Data released on Wednesday showed that the CPI increased by 4.2% YoY in May, up from 3.8% in April and in line with market expectations. On a monthly basis, inflation rose by 0.5%, also matching consensus forecasts.

The core CPI, which excludes food and energy prices, increased by 0.2% MoM and 2.9% YoY. This underlying inflation measure remains closely watched by policymakers as a gauge of persistent price pressures.

Despite the stronger yearly inflation reading, the reaction in currency markets has remained limited. The US Dollar (USD) has struggled to post a meaningful move following the release, as investors await further clarity on the next policy steps from the Federal Reserve (Fed). Against this backdrop, NZD/USD continues to trade sideways around 0.5815 as market participants assess the potential implications of the inflation data for the US interest rate outlook.