NZD/USD treads waters around 0.5900, upside potential seems limited
|- NZD/USD struggles to hold ground near the 0.5900 psychological level.
- US Treasury yields have trimmed the daily losses, which might support the US Dollar (USD).
- Fed is expected to adopt a hawkish stance, which is exerting pressure on the pair.
NZD/USD retreats from the intraday high as a result of a recovery in the US Dollar (USD), trading higher around 0.5900 during the European session on Friday. The yields on US bonds have trimmed the daily losses, which might contribute to the support in underpinning the Greenback.
US Dollar (USD) remains robust, buoyed by the consistent flow of positive economic data concerning the state of the US economy. The US Dollar Index (DXY), which measures the performance of the Greenback against six other major currencies, is presently trading around 104.90. It's worth noting that it has moderated slightly from its peak on Thursday, which marked its highest level since April.
As said, labor data released on Thursday from the United States (US) showed that as of September 1, US Initial Jobless Claims declined to 216K, indicating a decrease from the previous figure of 229K. This figure was lower than the expected rise of 234K. Furthermore, in the second quarter (Q2), US Unit Labor Costs rose to 2.2%, up from the previous 1.6%, which was contrary to expectations of it remaining consistent.
Additionally, US Federal Reserve (Fed) is anticipated to sustain elevated interest rates over a prolonged period. Furthermore, there is an expectation that the Fed will enact a 25 basis point (bps) interest rate hike by the end of the year 2023. This hawkish sentiment is exerting substantial pressure on the NZD/USD pair.
On China-linked fears, Chinese President Xi Jinping has decided not to participate in the upcoming G20 leaders' summit in New Delhi this Saturday. This may exacerbate the existing tensions within the already fragile and deteriorating relationship between China and the United States (US). This situation is particularly noteworthy given the presence of US President Joe Biden at the event.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.