NZD/USD steadies near 0.6270 ahead of GDT auction

• US Dollar Index inches higher above the 98.50 mark.
• China is said to increase agricultural imports if tariffs are removed.
• Coming up: Bi-weekly Global Dairy Trade (GDT) auction and inflation data from New Zealand.

The NZD/USD pair posted modest losses on Monday but was able to close the day above the 0.63  handle. With the trading conditions returning to normal after Monday’s choppy action, the pair extended its slide pressured by the uncertainty surrounding the United State (US)-China trade dispute and a stronger USD and was last seen trading at 0.6265, erasing 0.5% on a daily basis.

Earlier in the session, Bloomberg reported that China was willing to ramp up its purchases of agricultural goods from the US up to $50 billion if the Trump administration were to agree to roll back the tariffs that were put in place before the trade war started. Meanwhile, investors are still trying to figure out what the next step will be in trade talks after sides reached a so-called “phase one” agreement last Friday.

On the other hand, the US Dollar Index is posting modest daily gains above the 98.50 mark despite a lack of significant macroeconomic data releases on Tuesday and keeping the bearish pressure on the pair intact.  

Inflation in New Zealand is expected to soften in Q3

Later in the session, the bi-weekly GDT Auction’s Price Index will be looked upon for fresh impetus. More importantly, Statistics New Zealand will release the inflation data in the early trading hours of the Asian session on Wednesday. Markets expect the CPI (Consumer Price Index) to drop to 1.4% on a yearly basis  in the third quarter from 1.7% in the second quarter. A soft inflation reading is likely to suggest that the Reserve Bank of New Zealand (RBNZ) is likely to preserve its dovish stance, which could cause the NZD to weaken against its rivals.  

Technical levels to watch for