NZD/USD remains subdued near 0.5850 following PBOC rate decision

• NZD/USD holds losses after the People’s Bank of China decided to leave its Loan Prime Rates unchanged.
• The US Dollar climbs as the Fed signals a gradual approach to cutting borrowing costs in the coming months.
• The White House said US firms will control TikTok’s algorithm, with Americans holding six of seven board seats.

NZD/USD continues its losing streak for the fourth successive session, trading around 0.5860 during the Asian hours on Monday. The pair remains subdued after the People’s Bank of China (PBOC) decided to leave its one- and five-year Loan Prime Rates (LPRs) unchanged at 3.00% and 3.50%, respectively. It is worth noting that any change in the Chinese economy could impact the NZD as China and New Zealand are close trading partners.

The White House announced that US companies will take control of TikTok’s algorithm, while Americans will occupy six of seven board seats for its US operations. White House Press Secretary Karoline Leavitt said the agreement could be finalized “in the coming days,” though Beijing has not yet commented.

New Zealand (NZD) faces challenges against its peers due to prevailing dovish expectations for the Reserve Bank of New Zealand’s (NZD) policy outlook. Last week’s data showed the economy contracted more than expected in Q2, with the trade deficit exceeding forecasts, prompting markets to fully price in a 25-basis-point rate cut in October and assign roughly a 25% probability to a larger 50-basis-point move.

The NZD/USD pair depreciates as the US Dollar (USD) receives support from cautious sentiment surrounding the Federal Reserve (Fed) interest rate path. Fed Chair Jerome Powell said during the post-meeting conference that he doesn't feel the need to move quickly on rates and that the Fed is in a meeting-by-meeting situation regarding the outlook for interest rates. The Fed's rate projection, or the so-called "dot plot," showed a forecast of two more rate cuts this year.

Traders will likely observe the upcoming Personal Consumption Expenditures (PCE) Price Index later this week, the Federal Reserve’s preferred inflation gauge, which is expected to signal subdued price pressures.