NZD/USD surges above the 0.6170 area following the Chinese PMI

• NZD/USD gains traction above 0.6175, up 0.43% in the early session on Monday.
• The Chinese Manufacturing Purchasing Managers' Index (PMI) showed mixed readings.
• Market players will monitor the New Zealand Employment data, Nonfarm Payrolls later this week.

The NZD/USD pair gains momentum and edges higher to 0.6175 during the early Asian session on Monday. The uptick in the Kiwi comes after the release of the Chinese NBS Manufacturing and Non-Manufacturing Purchasing Managers Index (PMI).

The latest publication released by The National Bank of New Zealand showed on Monday that July's New Zealand ANZ Activity Outlook improved to 0.8%, above the expected 0.9% decline. Meanwhile, ANZ Business Confidence fell from -18 in June to -13.1 in July. 

Regarding the Chinese data, China’s National Bureau of Statistics (NBS) revealed on Monday that the Manufacturing Purchasing Managers' Index (PMI) increased to 49.3 in July, improving from 49.0 in June and the market's estimate of 49.2. However, the figure was marked below 50 for the fourth straight month, indicating the contraction zone. Meanwhile, the NBS Services PMI fell from 53.2 in June to 51.5 in July.

Investors anticipate additional policy support to spur economic recovery post-Covid. The State Council Information Office of China revealed that Li Chunlin, vice chairman of the National Development and Reform Commission, and officials from the Ministry of Industry and Information Technology, the Ministry of Commerce, and the State Administration of Market Regulation will hold a press conference at 7 a.m. GMT to announce additional measures to boost consumption. The development of the headline might boost the China-proxy Kiwi.

The annual US inflation figure grew at its slowest pace in over two years. The US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index fell from 3.8% in May to 3% in June, below the market expectation of 3.1%. While the Federal Reserve's preferred measure of inflation, the Core PCE Price Index, came in at 4.1% annually, down from 4.6% in May and below market expectations of 4.2%. The softer data indicates pricing pressures are easing and may bring the Federal Reserve (Fed) closer to the end of its hiking cycle. This, in turn, might cap the upside in the US Dollar and act as a tailwind for NZD/USD.

Looking ahead, the New Zealand Employment Change QoQ and Unemployment Rate Q2 will be released on Wednesday. The week's highlight will be the Nonfarm Payrolls report, due on Friday. The economy is expected to have created 180,000 jobs, with the unemployment rate remaining at 3.6%. These events could significantly impact the US Dollar's dynamic and give the NZD/USD pair a clear direction.