NZD/USD attracts some buyers above 0.5900 on Monday.
Chinese finance ministry would reduce the 0.1% duty on stock trading to boost the capital market, strengthen investor confidence.
Fed is prepared to hike interest rates further if required but it would be determined by data.
Market players await the US Nonfarm Payrolls, Chinese Caixin Manufacturing PMI.
The NZD/USD pair snaps the two-day losing streak during the early European session on Monday. The pair currently trades around 0.5916, gaining 0.23% on the day. The strength of the Kiwi is bolstered by the fresh measures from Chinese officials to recover confidence in the market.
On Sunday, the Chinese finance ministry said that the authorities would reduce the 0.1% duty on stock trading to stimulate the capital market and strengthen investor confidence. Alongside the action by the Ministry of Finance, the China Securities Regulatory Commission (CSRC) is implementing measures to bolster market confidence in listed companies after the Chinese equities index slumped to nine-month lows.
This development boosts the China-proxy Kiwi against the Greenback. However, investors will keep an eye on the Chinese Caixin Manufacturing PMI for August due on Friday. The concerns about China's deteriorating economic conditions should dampen market optimism, which might weigh on the NZD and act as a headwind for the NZD/USD pair.
Apart from this, the chief economist of the Reserve Bank of New Zealand (RBNZ) said last week that policymakers would lower the OCR sooner than they have signaled if China experienced a more significant deceleration than the RBNZ anticipates.
On the US Dollar front, Federal Reserve (Fed) Chairman Jerome Powell stated at the Jackson Hole Economic Symposium on Friday that the central bank is prepared to hike interest rates further if required. He added that the next rate hike decision would be determined by data. Meanwhile, Cleveland Fed President Loretta Mester said that GDP and labor market data show that the economy is gaining momentum. She emphasized that the current rates are not restrictive enough to reach the inflation target and a lower growth rate would be essential to moderate inflation. The US Nonfarm Payrolls data on this Friday could offer hints about the future path of monetary policy. The stronger than expected data might lift the US Dollar and limit the upside for the pair.
Moving on, traders will monitor on the US Nonfarm Payrolls and inflation data due later this week. The market anticipated that the US economy to create 170K jobs in August. Also, the Chinese Purchasing Managers' Indexes (PMI) will be in focus. The data will be critical for determining a clear movement for the NZD/USD pair.
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