NZD/USD holds steady above 0.6050 due to news of progressing US-China trade talks

• NZD/USD appreciated as the US Dollar struggles due to renewed concerns over the Fed's independence.

• China will approve export applications for controlled items in return for the US lifting a series of restrictive measures.

• President Trump may choose his preferred candidate to lead the Federal Reserve next year.

NZD/USD continues its winning streak for the fifth consecutive session, trading around 0.6070 during the European hours on Friday. The pair gained ground as the US Dollar (USD) struggled due to renewed concerns over the US Federal Reserve’s (Fed) independence.

The Chinese Commerce Ministry stated on Friday, “London talks served to further confirm details on framework.” China will approve export applications for controlled items, while the United States will, in turn, lift a series of restrictive measures imposed on China. This is important to note that any Chinese economic update could influence the New Zealand Dollar (NZD) as both countries are close trading partners.

The ANZ Roy Morgan Consumer Confidence climbed to 98.8 in June from the previous reading of 92.9, marking the highest reading since December. Earlier this month, stronger-than-expected Q1 GDP and an improved May trade surplus in New Zealand further supported the Reserve Bank of New Zealand’s (RBNZ) decision to delay additional interest rate cuts.

US President Donald Trump could weaken Fed Chair Jerome Powell’s authority by announcing his preferred candidate to lead the central bank next year. Trump said that he has a list of potential Powell successors down to “three or four people,” without naming the finalists.

The upside of the NZD/USD could be restrained as the Greenback may receive support from market caution, driven by the latest remarks from the Iranian Foreign Minister, Abbas. Araghchi stated that Tehran has no intention of resuming nuclear negotiations with the United States. “No agreement or arrangement has been made to resume negotiations. Neither any promise has been given, nor any discussion has taken place on this matter,” He added as per CNN.

The downbeat US Gross Domestic Product (GDP) data further supports dovish expectations surrounding the Federal Reserve’s (Fed) policy outlook. The report showed a 0.5% contraction in the first quarter, which came in worse than the market expectation of -0.2%. However, the impact of the weaker US GDP was offset by Jobless Claims falling to a five-week low at 236K and Durable Goods Orders posting a 16.4% increase, the biggest gain in 11 years. Traders will likely observe the US May Personal Consumption Expenditures (PCE) Price Index data later in the North American session.