NZD/USD depreciates amid risk aversion due to geopolitical tensions, trades below 0.5900

NZD/USD depreciates to near 0.5880 during the Asian trading session on Tuesday, as investors turn toward the US Dollar (USD) seeking refuge amid escalated geopolitical tensions in the Middle East. Traders await Israel’s response to Iran’s airstrike over the weekend. Additionally, traders are awaiting New Zealand's Consumer Price Index (CPI) data for the first quarter of 2024, scheduled for release on Wednesday. Market expectations suggest a slight uptick to 0.6% quarter-on-quarter, compared to the previous period's 0.5%.

The Chinese and Iranian foreign ministers recently engaged in a phone conversation, during which the Iranian foreign minister conveyed Iran's willingness to exercise restraint and expressed no desire to escalate the current situation further, as per Chinese state media. Additionally, China vehemently condemns and firmly opposes the recent attack on the Iranian embassy in Syria, deeming it a serious breach of international law and categorizing it as 'unacceptable'.

The New Zealand Dollar (NZD) fails to take any response from the mixed Chinese data, considering the two nations are close trading partners. China’s Gross Domestic Product (GDP) rose by 1.6% QoQ in the first quarter of 2024, against the previous quarter’s increase of 1.0%. GDP year-over-year rose by 5.3%, exceeding the expected 5.0% and 5.2% prior. Meanwhile, China’s Industrial Production (YoY) increased by 4.5% in March, against the market expectations of 5.4% and 7.0% prior.

On the other side, the US Dollar (USD) gained strength as Retail Sales surpassed expectations, denting hopes for potential monetary policy easing by the Federal Reserve (Fed). March's Retail Sales (MoM) surged by 0.7%, outpacing forecasts of 0.3%. February's figure was also revised upward from 0.6% to 0.9%. The Retail Sales Control Group climbed by 1.1%, marking a substantial increase from the previous 0.3%. Investors are now eyeing upcoming US housing data due on Tuesday, as well as Fed Chair Jerome Powell's speech at the Washington Forum.