NZD/USD gains traction to near 0.5750 as traders hope for compromise in US-China trade war

• NZD/USD rebounds to around 0.5740 in Monday's Asian session.
• Trump said we're going to be fine with China. 
• RBNZ indicated it remains open to further rate reductions. 

The NZD/USD pair gains ground to near 0.5740 during the Asian trading hours on Monday. The New Zealand Dollar (NZD) strengthens against the US Dollar (USD) as traders hope the United States (US) may temper its latest escalation of the trade war with China. 

US President Donald Trump on Friday threatened an additional 100% tariff on Chinese goods from November 1 in retaliation for new export controls Beijing is planning for valuable rare earth minerals. On Sunday, Trump softened his tone, saying that China's economy "will be fine" and that the US wants to "help China, not hurt it."

Easing trade tensions between the world's two largest economies provides some support to the China-proxy Kiwi, as China is a major trading partner of New Zealand. 

Meanwhile, the US government shutdown has entered its third week. Congress remains deadlocked on a funding plan, and the Senate isn't scheduled to hold any votes until Tuesday. A prolonged US federal shutdown could weigh on the Greenback and act as a tailwind for the pair in the near term. 

On the other hand, the dovish stance of the Reserve Bank of New Zealand (RBNZ) might undermine the NZD against the USD. New Zealand's central bank cut its benchmark rate by an aggressive 50 basis points (bps) last week and kept the door open for further reductions. Financial markets are currently pricing in nearly a further 25 bps cut to 2.25% at the next interest rate decision in November.