NZD/USD remains above 0.5950 as bulls stay on the sidelines
- NZD/USD holds ground above 0.5950 after the US moderate economic data.
- Investors still price in a 25bps rate hike by the Fed, underpinning the US Dollar (USD).
- Market optimism due to China’s measures, providing support to the Aussie pair.
NZD/USD snaps the previous session’s losses, holding grounds above 0.5950 during the Asian session on Monday. The moderate data from the United States (US) provides support in underpinning the pair as it reinforces the possibility of no interest rate change by the US Federal Reserve (Fed) at the September meeting.
However, investors are still factoring in the possibility of a 25 basis point (bps) interest rate hike by the Fed. This expectation continues to pose a challenge for the AUD/USD pair, restraining its potential gains.
As said, the US Nonfarm Payrolls report showed 187,000 new jobs were added, higher than the market consensus of 170,000. In the month of July, 157,000 new jobs were added. Average Hourly Earnings (Aug) fell to the rate of 4.3%, which was anticipated to remain consistent at 4.4% prior.
China's recent actions to boost local dollar liquidity along with relaxing certain mortgage regulations have initiated market optimism, lending support to economic growth. This could boost investors’ confidence and underpin the Kiwi pair as New Zealand is a close trading partner of the world’s second-largest economy.
Additionally, China's leading economic authority, the National Development and Reform Commission (NDRC), has announced plans to create a dedicated department aimed at revitalizing the country's struggling private sector.
US Dollar Index (DXY), which measures the performance of the Greenback against six other major currencies, retreating from the recent gains. Spot prices are trading around 104.10 at the time of writing. However, the improved yields on US Treasury bonds provided support to the buck, which closed at 4.18% on Friday. Market participants seek further cues regarding the upcoming Fed’s policy decision as robust US Nonfarm Payrolls data raised concerns around the inflation scenario.