• The New Zealand Dollar extends its recovery amid strong exporting data from China.
• Easing New Zealand inflation expectations have increased hopes of further RBNZ easing.
• The focus today is on the US Jobless Claims for further clues on the health of the US labour market.

The New Zealand Dollar appreciates for the second consecutive day against the US Dollar on Thursday, buoyed by a positive market mood and strong import and export data from China, pointing to the economic recovery of New Zealand’s main trading partner.

Data from China released earlier on Thursday revealed that exports grew beyond expectations favoured by the trade truce with the US. The trade balance shrank, due to a larger-than-expected increase in imports, which suggests that the domestic demand is picking up.

In New Zealand, the RBNZ’s inflation expectations reveal that price pressures are expected to ease in the third quarter of the year, which gives the central bank some leeway to cut interest rates further after their August 20 meeting.

The Kiwi is also drawing support from a weaker US Dollar that remains on its back foot after last week’s payrolls data showed a softening labour market and boosted hopes for Further Fed monetary easing in the coming months.

Investors are now looking at the weekly Jobless claims data, due later today, to assess employment trends better. In that sense, another negative surprise would provide further reasons for the Fed to cut rates in September and might add bearish pressure to the USD.