The NZD/USD pair faces new supply challenges during the Asian session, but spot prices bounced back from an hourly low and are trading just below the 0.6100 level, down over 0.30% for the day.
China’s trade balance data indicates a surplus of $80.6 billion in July, which helped bolster currencies in the Antipodes, such as the New Zealand Dollar. But imports fell 12.4% YoY and exports fell 9.2% YoY, showing weaker demand at home and abroad. This limits the NZD/USD pair’s potential for major upside, along with a softer tone in the Asian equity market and US Dollar purchasing.

For the second day running, the USD Index is rising as a result of expectations that the Fed will tighten monetary policy. The most recent US jobs report shows that the labour market is tight, which permits the Fed to keep its hawkish position. Additional interest rate increases, according to Fed Governor Michele Bowman, may be required to bring inflation down to the desired 2% level.

According to Bowman, the economy is expanding moderately, but inflation is still high. This supports US Treasury bond yields and creates space for a 25 bps lift-off in September or November, which benefits the greenback. The least-resistance path for the NZD/USD pair remains negative, according to the fundamental backdrop, which supports USD bulls.
Although the upswing may be viewed as a buying opportunity, bearish traders must first wait for a persistent breach below the psychological level of 0.6500 before preparing for more losses. Market investors are waiting for the publication of US trade balance data while concentrating on US and Chinese consumer inflation data.

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