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NZD/USD appears to be the most active of the G10 currency pairings early Monday morning in Asia, rising 0.35 percent intraday to 0.6235. In doing so, the Kiwi pair benefits from positive New Zealand (NZ) data and a risk-on sentiment, primarily supported by China-related news, despite the Juneteenth holiday limiting market movement.

New Zealand's Business NZ PSI for May rises to 53.3 from 49.4 previously and contrasts with the prior week's Business NZ PMI for the same month, as well as mixed NZ Gross Domestic Product (GDP) for the first quarter (Q1) 2023, which favours the NZD/USD investors.

In a similar vein, the most recent news regarding China enabled markets to maintain optimism and propel the Kiwi pair price.

Reuters reported that US Secretary of State Antony Blinken and Chinese Foreign Minister Qin Gang held what both parties termed candid and constructive discussions on their differences regarding Taiwan and trade on Sunday, but appeared to agree on little beyond continuing the conversation with an eventual meeting in Washington. In addition, news from the South China Morning Post (SCMP) citing the China State Council flashes favourable signals for sentiment, as it states, "The Council reviewed a series of macroeconomic policies designed to expand 'effective demand,' strengthen the real economy, and defuse key risks."

Notably, the US Dollar Index (DXY) did not respond positively to the US Federal Reserve's (Fed) hawkish pause in the rate rise trajectory, as mostly negative data challenged expectations of a US central bank rate hike beyond July.

Nevertheless, provisional readings of the Consumer Sentiment Index (CSI) for June from the University of Michigan (UoM) improved, while US inflation expectations moderated and tamed US Dollar bulls. Moreover, as of late, Fed policymakers have been hawkish and have challenged NZD/USD investors.

Alternately, the latest US Federal Reserve (Fed) Monetary Policy Report to the US Congress, published on Friday, stated: "Inflation in the US is well above target and the labour market remains very tight," as reported by Reuters. According to Reuters, the report also stated, "The outlook for the federal funds rate is subject to considerable uncertainty."

Thomas Barkin, president of the Richmond Fed, added, "Raising rates further could increase the risk of a more significant economic slowdown." The policymaker added, however, that the Fed can do more to stall the resilient US economy, which caused a rise in 2-year Treasury bond yields to 4.75 percent and helped the US Dollar recover from its lows.

According to Reuters, Federal Reserve Governor Christopher Waller stated on Friday that the US economy is still "roaring along" and that the US finance system appears to be at peace.

A light calendar and Juneteenth holiday may limit near-term NZD/USD movement, but investors may remain optimistic in the face of stronger sentiment and broad US Dollar weakness. However, Fed Chairman Powell's testimony and June PMIs will also be crucial for determining unambiguous directions.

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