NZD/USD sticks to strong intraday gains around 0.6300 mark amid fresh USD selling

• NZD/USD regains positive traction on Thursday and snaps a four-day losing streak to a one-week low.
• Bets for a less hawkish Fed exert downward pressure on the USD and lend some support to the pair.
• China's economic woes, US-China tensions and geopolitical risk might cap the risk-sensitive Kiwi.

The NZD/USD pair builds on the overnight bounce from a one-week low and gains strong positive traction during the Asian session on Thursday. Spot prices jump to a fresh daily high, around the 0.6300 mark in the last hour and for now, seems to have stalled a four-day-old corrective decline from the highest level since February.

The US Dollar (USD) comes under renewed selling pressure as the markets continue to price out the possibility of any further rate hikes by the Federal Reserve (Fed) after the widely expected 25 bps lift-off in July and act as a tailwind for the NZD/USD pair. The New Zealand Dollar (NZD), on the other hand, draws support from stronger domestic consumer inflation figures released on Wednesday, which showed that the headline CPI rose by 1.1% during the second quarter as compared to the 1% estimated.

Moreover, the yearly rate decelerated less than expected to 6% during the reported period and forced investors to price in a more hawkish Reserve Bank of New Zealand (RBNZ). Apart from this, the underlying bullish sentiment around the global equity markets is seen as another factor benefitting the risk-sensitive Kiwi. That said, concerns over slowing economic growth in China, along with the worsening US-China ties, might keep a lid on any further appreciating move for antipodean currencies, including the Kiwi.

It is worth recalling that data released earlier this week showed that the economic growth in China decelerated substantially in the second quarter and Retail sales - a gauge of consumption - slowed sharply in June. Furthermore, China's ambassador to Washington said on Wednesday that China does not want a trade or tech war but will respond if the US imposes more curbs on imports of equipment to make advanced chips. Apart from this, geopolitical risks should cap the optimism and the NZD/USD pair, at least for now.

It is worth mentioning that Russia's defence ministry declared that any ships heading to Ukraine's Black Sea ports would be viewed as potential carriers of military cargo and party to the conflict from Thursday. This, in turn, warrants some caution for aggressive bullish traders and positioning for the resumption of the NZD/USD pair's strong recovery from the YTD low - levels just below the 0.6.000 psychological mark - touched in June. Market participants now look to the US macro data for a fresh impetus.

Thursday's US economic docket features the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Existing Home Sales data, due later during the early North American session. This, along with the broader risk sentiment, will influence the USD price dynamics and produce short-term trading opportunities around the NZD/USD pair.

Technical levels to watch