NZD/USD drifts lower amid the emergence of some USD buying, holds above 0.6100 mark
- NZD/USD remains under some selling pressure for the fourth straight day on Tuesday.
- The USD regains positive traction amid the Fed’s hawkish stance and weighs on the pair.
- Concerns about China’s economic recovery further contribute to the modest decline.
The NZD/USD pair struggles to capitalize on the previous day's modest rebound from the 0.6100 mark, or a one-week low and trades with a mild negative bias during the Asian session on Tuesday. Spot prices remain confined in a familiar range held over the past month or so and currently hover around the 0.6120 region, down nearly 0.20% for the day amid the emergence of fresh US Dollar (USD) buying.
Against the backdrop of the Federal Reserve's (Fed) hawkish outlook, policymakers continue to argue in favor of only one interest rate cut this year. In fact, Philadelphia Fed President Patrick Harker said on Monday that keeping rates where they are for a bit longer will help get inflation down and mitigate upside risks. This remains supportive of elevated US Treasury bond yields and assists the USD to regain some positive traction, which, in turn, is seen weighing on the NZD/USD pair.
Apart from this, mixed economic data released from China on Monday underlined bumpy recovery in the world's second-largest economy and turns out to be another factor undermining antipodean currencies, including the Kiwi. Meanwhile, weaker US consumer and producer prices suggested that inflation is subsiding, keeping hopes alive for the first Fed rate cut in September and another in December. This might cap gains for the Greenback and lend some support to the NZD/USD pair.
Market participants now look forward to the US economic docket, featuring the release of monthly Retail Sales and Industrial Production figures. Apart from this, speeches by influential FOMC members and the US bond yields will drive the USD demand, which, in turn, should provide some meaningful impetus to the NZD/USD pair. Traders might further take cues from the broader market risk sentiment to grab short-term opportunities around the risk-sensitive New Zealand Dollar (NZD).