NZD/USD remains on the defensive below 0.5700 as traders await US GDP release

NZD/USD softens to near 0.5695 in Thursday’s early Asian session. 

Fresh US tariff threats could undermine the China-proxy Kiwi. 

The preliminary reading of the US Q4 GDP report will be in the spotlight later on Thursday. 

The NZD/USD pair remains on the defensive around 0.5695 during the early Asian session on Thursday. The tariff uncertainty from US President Donald Trump weighs on the New Zealand Dollar (NZD). Investors brace for the preliminary reading of Gross Domestic Product (GDP) for the fourth quarter (Q4), which is due later on Thursday. 

Trump has already raised tariffs on Chinese goods and has threatened to impose sweeping trade actions, including a 25% border tax on goods from Canada and Mexico, as well as new "reciprocal" tariffs for each country. Trump has also ordered an investigation into copper imports, which could lead to potential tariffs on the metal. Any signs of renewed US tariff threats could drag the China-proxy Kiwi lower as China is a major trading partner to New Zealand. 

Furthermore, the expectation of further rate cuts from the Reserve Bank of New Zealand (RBNZ) might contribute to the NZD’s downside. "Our base case is the RBNZ will cut by 25bp at each of the following two meetings, in April and May," said ASB chief economist Nick Tuffley.

On the other hand, the weakening of the US Dollar (USD) due to the slow of softer US economic data might help limit the pair’s losses. US consumer confidence fell the most since August 2021, declining to 98.3 in February versus 105.3 prior, according to the Conference Board. Traders will take more cues from the Fedspeak later on Thursday. The Federal Reserve’s (Fed) Michelle Bowman, Beth Hammack and Patrick Harker are set to speak. These remarks might offer some hints about the US interest rate path this year.