NZD/USD holds gains above 0.5700 after rebounding from six-month lows

• NZD/USD rebounds from a six-month low of 0.5682 recorded on Tuesday.

• The New Zealand Dollar gains support as RBNZ’s Conway signals no plans to use additional monetary policy tools soon.

• Trump warned of new trade restrictions if China enforces rare earth export controls and higher port fees.

NZD/USD halts its six-day losing streak, rebounding from a six-month low of 0.5682 recorded in the previous session and currently trading around 0.5730 during the early European hours on Wednesday. The pair advanced as the New Zealand Dollar (NZD) gains ground following the comments from Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway, who stated that the central bank doesn’t expect to use additional monetary policy (AMP) tools again anytime soon.

RBNZ Chief Economist Conway also added that the neutral interest rate is constantly shifting, with rates around 2.5% sitting at the lower end of the neutral range. Conway added that the central bank is still “feeling its way” and has no plans to introduce new monetary policy tools, reaffirming that the Official Cash Rate (OCR) remains its primary policy instrument.

The NZD/USD pair remains stronger after the release of China’s softer Consumer Price Index (CPI) data, with annual inflation declining to 0.3% year-over-year (YoY) in September. The market consensus was for a 0.1% decline in the reported period, following a fall of 0.4% in August. Meanwhile, the monthly inflation rose to 0.1%, weaker than the expected 0.2%. China’s Producer Price Index (PPI) fell 2.3% YoY, following a 2.9% fall prior, as expected.

However, traders adopt caution after US President Donald Trump criticized China on Wednesday for its recent protectionist trade policies, threatening additional targeted trade restrictions if China goes ahead with imposing fresh rare earth mineral export controls and additional port fees for foreign container ships in Chinese ports.