NZD/USD gains ground amid easing trade tensions and weaker USD

• NZD/USD rises for the second straight session, reclaims 0.6000 psychological level.
• Kiwi supported by improved global risk sentiment and easing trade tensions.
• US and Japan strike tariff deal; US-EU reportedly close to similar 15% cap on key export tariff ahead of August deadline.

The New Zealand Dollar (NZD) extends gains for a second straight day against the US Dollar (USD) on Wednesday, as the Greenback remains under pressure amid a modest recovery in risk appetite following somewhat easing global trade tensions.

The NZD/USD pair is ticking higher and has climbed back above the 0.6000 mark during Wednesday's American trading hours. At the time of writing, the pair is trading around 0.6037, up nearly 0.60% on the day as buyers regain control after falling for two consecutive weeks.

The Kiwi's advance is underpinned by growing optimism around global trade after positive headlines helped ease investor jitters. On Tuesday, the United States and Japan struck a landmark deal to reduce planned tariffs on autos and industrial goods to 15%, while Japan committed to a $550 billion investment package into the US economy. This has lifted risk appetite across markets, with equities and commodity-linked currencies rallying in response.

Meanwhile, the US and the European Union (EU) are reportedly close to finalizing a similar agreement to cap tariffs at 15% across key exports, helping prevent a potential escalation ahead of the August 1 deadline. Though the EU is preparing a €93 billion retaliatory tariff package as a backup, markets remain hopeful that a deal will be reached in time. These developments, combined with signs of dialogue between Washington and Beijing -- highlighted by US Treasury Secretary Scott Bessent's meeting with Chinese officials next week to discuss extending the August 12 tariff truce -- are reinforcing the risk-on mood. This is also keeping the US Dollar on the back foot, allowing the NZD to extend its rebound.

Fresh tailwinds for the Kiwi also come from domestic data, which painted a mixed but stabilizing picture of the New Zealand economy. The Consumer Price Index (CPI) rose by 0.5% QoQ in Q2, lifting annual inflation to 2.7% -- just below expectations but still within the Reserve Bank of New Zealand's (RBNZ) 1%-3% target band.

Earlier this month, the RBNZ held its Official Cash Rate steady at 3.25%, pausing its easing cycle. However, the central bank maintained a dovish tone, signaling openness to further policy easing if inflation continues to cool and growth remains subdued. Markets are now pricing in a roughly 75% chance of a 25-basis-point cut in August.

Looking ahead, attention now turns to key US economic data scheduled for Thursday, which could influence the next leg for the NZD/USD pair. The S&P Global flash Purchasing Managers Index (PMI) for July are due at 13:45 GMT, with the manufacturing index expected to hold near 52.5 and the services reading around 53. In addition, the weekly US Initial Jobless Claims report will be released earlier at 12:30 GMT, offering fresh insight into the labor market's strength.