NZD/USD remains under pressure below the 0.5900 mark amid the cautious mood, USD demand

The NZD/USD pair remains under pressure below the 0.5900 barrier during the early Asian session on Friday. The US Dollar (USD) gains momentum as investors price in a quarter basis point (bps) hike in interest rates by the Federal Reserve (Fed) for the rest of the year. The pair currently trades near 0.5875, gaining 0.03% on the day.

Data released by the US Department of Labor on Thursday showed that the US Initial Jobless Claims totaled 216,000 in the week ending of September 2. This figure surpassed the market's forecast of 234,000 and followed the previous week's revised figure of 229,000 (from 228,000). Meanwhile, Nonfarm Productivity rose by 3.5%, below the 3.8% market expectation and revised from the first estimate of 3.7%. In response to the data, the US Dollar Index (DXY) edged higher to the highest level since early March above the 105.00 area,

New York Federal Reserve (Fed) President John Williams stated that inflation is heading in the right direction while adding that he requires additional information before making a decision. Chicago’s Fed President Austan Goolsbee said the Fed may achieve the golden path, where inflation erases but a recession is avoided. Along with The Federal Reserve (Fed) Governor Christopher Waller last week, he said that there is further room to increase interest rates, but the data will determine whether the Fed needs to hike rates again and if it is done hiking rates.

Nevertheless, the US economic data lends support to the "higher for longer" interest rate narrative, which boosts the Greenback across the board. According to the CME FedWatch Tool, markets have priced in 93% odds of holding the interest rate at the September meeting, while the probability of raising rates in its November meeting is around 51%.

On the Kiwi front, Statistics New Zealand showed on Thursday that the nation’s Manufacturing Sales for the second quarter improved to 2.9% versus a 2.1% drop in the previous reading. Earlier this week, the ANZ Commodity Price for August dropped to 2.9% from a 2.6% decline in July. The New Zealand Terms of Trade Index improved to 0.4% in the second quarter, compared to a decline of 1.5% in the previous reading and an expected drop of 1.3%. Apart from the data, the fear of the economic slowdown in China and the property debt crisis might exert some selling pressure on the China-proxy New Zealand Dollar (NZD).

Moving on, market participants will digest the data and wait for fresh impetus. In the absence of top-tier economic figures from both New Zealand and the US, risk sentiment will be a key factor for the pair movement. On Saturday, the Chinese Consumer Price Index (CPI) YoY for August will be released and it might trigger volatility in the next sessions. These figures could give a clear direction for NZD/USD.