The NZD/USD pair attracts fresh buying on the first day of a new week and stalls Friday's retracement slide from the 0.6015 area, or its highest level
since August 11. Spot prices trade around the 0.5950-0.5955 region during the Asian session, up nearly 0.20% for the day, and draw support from a subdued US Dollar price action.
The mixed US monthly jobs report released on Friday ensures that the Fed will leave rates unchanged at its September meeting and fails to assist the USD to capitalize on last week's strong move up back closer to the August monthly swing high. Apart from this, the optimism over more supportive measures from China to shore up economic growth boosts investors' confidence and benefits antipodean currencies, including the New Zealand Dollar .
In fact, China's top economic planner – the National Development and Reform Commission – said that it would establish a designated department to bolster the country's faltering private economy. This comes after China increased local dollar liquidity and loosened some mortgage rules last week, which remains supportive of a positive tone around the equity markets. The upbeat mood further undermines the safe-haven buck and benefits the risk-sensitive Kiwi.
The upside for the NZD/USD pair, however, seems limited, warranting some caution for bullish traders and before positioning for any meaningful appreciating move in the near term. The markets seem convinced that the Fed will keep interesthigher for longer and are still pricing in the possibility of one more 25 bps lift-off by the end of this year. The hawkish outlook continues to act as a tailwind for the Greenback and should keep a lid on any further gains for the major.
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