NZD/USD clings to gains near 0.5980 area after China’s trade data, Fed decision awaited

• NZD/USD attracts some buyers on Thursday amid a modest USD weakness.
• Elevated US bond yields should help limit the USD losses and cap the major. 
• The markets react little to Chinese trade data as the focus remains on the Fed.

The NZD/USD pair builds on the previous day's bounce from the 0.5910 region, or over a three-month trough and gains some positive traction during the Asian session on Thursday. Spot prices stick to intraday gains near the 0.5975-0.5980 area amid a modest US Dollar (USD) downtick and move little following the release of Chinese trade data.

China's Trade Balance for October, in Chinese Yuan (CNY) terms, came in at CNY679.1 billion, expanding from the previous figure of CNY582.62 billion, led by an 11.2% YoY rise in exports. This comes on the back of signs that China's big stimulus push is helping improve business conditions, which, in turn, offers some support to the NZD/USD pair. 

Meanwhile, the USD ticks lower amid some profit-taking following the previous day's blowout rally to its highest level since July 30 touched in reaction to Donald Trump’s comeback as the 47th President of the United States (US). This offers additional support to the NZD/USD pair, though a combination of factors should cap any meaningful upside. 

Investors turned optimistic amid hopes that Donald Trump's policies could push up growth and inflation. This could reduce the pace of interest rate cuts by the Federal Reserve (Fed), which remains supportive of elevated US Treasury bond yields, which, in turn, should act as a tailwind for the Greenback and keep a lid on the NZD/USD pair. 

Moreover, expectations that Trump will slam fresh tariffs on China, along with bets for more aggressive rate cuts by the Reserve Bank of New Zealand (RBNZ), should contribute to capping antipodean currencies, including the Kiwi. Traders might also opt to wait for the outcome of a two-day Federal Open Market Committee (FOMC) policy meeting. 

The Fed is scheduled to announce its policy decision later this Thursday and is widely expected to lower borrowing costs by 25 basis points (bps). Market participants, however, will scrutinize Fed Chair Jerome Powell's remarks for cues about the future rate-cut path, which might influence the buck and provide a fresh impetus to the NZD/USD pair.