• NZD/USD drifts higher to around 0.5925 in Monday’s Asian session, adding 0.26% on the day. 
• Improved risk sentiment supports the New Zealand Dollar.
• Fed officials highlighted the economic uncertainty and trade policy risks.

The NZD/USD pair gains traction to near 0.5925 during the Asian trading hours on Monday. The New Zealand Dollar (NZD) strengthens against the Greenback amid easing concerns over a trade war between the United States and China. Investors will closely monitor the joint statement from the world’s two biggest economies on the Geneva trade talks. 

After meetings in Geneva, Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer announced on Sunday that an agreement had been reached with China to reduce the US trade deficit. Meanwhile, China’s Vice Premier He Lifeng described trade talks with US officials as “an important first step” in stabilising bilateral trade relations. Any positive developments surrounding the US and China trade talks could provide some support to the China-proxy Kiwi, as China is a major trading partner of New Zealand. 

A slew of Federal Reserve (Fed) officials on Friday emphasized the economic uncertainty and trade policy risks, as US tariffs are inflation-prone and complicate the Fed’s job of balancing its dual mandate goals. Swap markets have priced in the Fed’s first 25 basis points (bps) rate cut for the July meeting, and they expect two additional rate reductions towards the end of the year.

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