NZD / USD Falls Towards 0.6100 As Us Biden Plans To Tax The Wealthy More Heavily And China Cpi Is In Focus

In the Asian session, the NZD / USD pair was unable to retake the crucial resistance of 0.6120. The New Zealand dollar is falling toward the round-number support of 0.6100 as the news that US President Joe Biden has proposed increasing the corporate tax rate from 21% to 28% has strengthened negative market sentiment.

US Vice President Joe Biden proposes a 25% tax on billionaires and steep levies on wealthy investors. In the budget, he has also proposed a 39.6% tax on incomes over $400,000. It appears that the fiscal policy of the United States is coming into action to prevent the Consumer Price Index (CPI) from exercising its muscles further. Higher taxes may have a significant impact on consumer expenditure by reducing market liquidity.

Futures for the S&P 500 are also under pressure as a result of the news that wealthy Americans will be taxed more heavily. The futures for the aggregate of 500 U.S. equities are declining during the Asian session. It appears that market participants will take advantage of Wednesday's insignificant recovery move as a selling opportunity.

The US Dollar Index (DXY) may experience some upward movement in response to Vice President Biden's proposal for higher tariffs. The USD Index is currently hovering above 105.20 and is anticipated to resume its upward trend.

This week, the US Nonfarm Payrolls (NFP) data will remain in the spotlight. According to the consensus, the US economy added 203K new jobs in February, which is less than the previous record-breaking release of 517K. At 3.4%, the unemployment rate is expected to remain unchanged. Investors are concerned about the Average Hourly Earnings data, which is anticipated to rise to 4.8% from the previous release of 4.4% on an annual basis. The likelihood of larger rate raises from the Federal Reserve will rise with an increase in the labor cost index (Fed).

Investors are monitoring China's Consumer Price Index (CPI) data. From the previous publication of 2.1% on an annual basis, China's CPI is anticipated to fall to 1.9%. The monthly CPI is anticipated to decrease to 0.2% from the previous release of 0.8%. The Chinese government and the People's Bank of China (PBOC) may be compelled to inject more liquidity into the economy if inflation falls.

Notably, New Zealand is one of China's primary trading partners, and an increase in liquidity in the Chinese economy will increase demand for the New Zealand Dollar.