NZD/USD weakens below 0.5950, budget bill concerns might cap its downside

• NZD/USD attracts some sellers to around 0.5930 in Thursday’s early Asian session, down 0.10% on the day.

• The renewed trade tensions between the US and China weigh on the China-proxy Kiwi. 

• 'Sell America' investment theme might undermine the US Dollar and cap the pair’s downside. 

The NZD/USD pair softens to near 0.5930 during the early Asian session on Thursday. However, the downside for the pair might be limited amid rising concerns over the US President Donald Trump administration's tax cut and spending bill and worries over the performance of the US economy.

New Zealand’s trade surplus soared to NZ$1,426 million in April from NZ$794 million in March,  Statistics New Zealand revealed on Wednesday. This figure came in better than the estimation of NZ$500 million. However, the renewed fears of trade tensions between the US and China weigh on the China-proxy Kiwi, as China is a major trading partner of New Zealand. 

China’s Commerce Ministry said early Wednesday that US measures on China’s advanced chips are ‘typical of unilateral bullying and protectionism.’ Chinese authorities urged the US to immediately correct its erroneous practices. 

On the other hand, the worries about a ballooning deficit that threatens America’s status as a safe haven exert some selling pressure on the Greenback. Republicans are still divided over the details of the tax legislation. House Speaker Mike Johnson said that Trump met with House Republicans on Tuesday and failed to convince his party's holdouts to back his sweeping tax bill. Republican hardliners continue to argue the bill does not sufficiently cut spending.