NZD/USD extends the rally above 0.6050 as US-China trade talks continue

• NZD/USD gathers strength to around 0.6055 in Tuesday’s Asian session.
• Trade talks between the US and Chinese officials were set to resume Tuesday.
  The RBNZ might slow the pace of rate cuts as uncertainty grows. 

The NZD/USD pair extends its upside to near 0.6055 during the early Asian session on Tuesday. The New Zealand Dollar (NZD) strengthens against the US Dollar (USD) amid hope of US-China trade talks. The second day of trade talks will be in the spotlight on Tuesday. 

Investors are optimistic about the negotiations between the US and China, even though there’s no significant breakthroughs were announced after the first day of talks. US President Donald Trump said that the talks “should go very well.” US officials noted that it indicated to remove restrictions on some tech exports in exchange for assurances that China is easing limits on rare earth shipments, which are critical to a wide array of energy, defense and technology products. Expectations about the US-China trade talks as officials struck a positive tone after the first day of negotiations underpin the China-proxy Kiwi as China is major trading partner of New Zealand. 

Additionally, rising bets that the Reserve Bank of New Zealand (RBNZ) will slow the pace of interest rate cuts as uncertainty grows might contribute to the NZD’s upside “While the RBNZ downgraded its economic forecasts compared to February and emphasized the high degree of uncertainty around global conditions, there was a surprising amount of caution around the timing and extent of further OCR cuts,” said Westpac senior economist Michael Gordon.