NZD/USD strengthens above 0.5950 ahead of US PPI release

• NZD/USD attracts some buyers to around 0.5985 in Thursday's Asian session. 
• Softer US economic data boost expectations of a Fed rate cut next month. 
• The US and China extended the trade truce another 90 days, supporting the China-proxy Kiwi. 

The NZD/USD pair gains ground to near 0.5985 during the Asian trading hours on Thursday. The US Dollar (USD) weakens against the New Zealand Dollar (NZD) as traders ramp up bets for a Federal Reserve (Fed) rate cut in September. The US Producer Price Index (PPI) and the weekly Initial Jobless reports will be the highlights later on Thursday.

Investors grew more confident about interest rate cuts ahead due to a cooling labor market and softer US inflation data, weighing on the USD. The US Consumer Price Index (CPI) rose 2.7% YoY in July, below the expectations of 2.8%, the US Bureau of Labor Statistics (BLS) showed Tuesday. The annual core CPI climbed by 3.1% in July versus the 2.9% rise recorded in June and above the market consensus of 3.0%. 

Easing trade tensions between the US and China continues to underpin the China-proxy Kiwi, as China is a major trading partner of New Zealand. President Donald Trump extended a trade truce with China for another 90 days on Monday, just hours before the last agreement between the world's two largest economies was due to expire. The Commerce Ministry stated Tuesday that the officials would extend relief to American companies that were placed on an export control list and an unreliable entities list. 

Traders will take more cues from the US PPI report for July, as it might offer some hints about the US interest rate path later this year. The headline PPI is expected to show an increase of 2.5% YoY in July, while the core PPI is projected to show a rise of 2.9% YoY during the same report period. Any signs of hotter-than-expected inflation could boost the Greenback and cap the upside for the pair in the near term.