NZD/USD trades with positive bias around 0.6070 amid softer USD, bearish bias remains

• NZD/USD attracts some buying on Friday amid a modest USD weakness.
• Mixed Chinese macro data fails to impress bulls or provide any impetus. 
• Bets for smaller Fed rate cuts and dovish RBNZ expectations cap the pair.

The NZD/USD pair trades with a positive bias for the second straight day on Friday, albeit lacks bullish conviction and remains close to over a one-month low touched earlier this week. Spot prices hover around the 0.6070 region and draw support from a modest US Dollar (USD) downtick.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, pulls back from its highest level since early August as traders opt to take some profits off the table following a strong rally since the beginning of this month. This, along with a generally positive tone around the equity markets, offers some support to the risk-sensitive Kiwi, though concerns about a slowdown in China act as a headwind.

Official data released earlier today showed that China's economy expanded 4.6% year-on-year in the July-September period, slightly slower than the 4.7% growth recorded in the previous quarter. This marked the lowest reading in 18 months and was below the government's full-year target of 5%, offsetting the better-than-expected Retail Sales and Industrial Production figures for the month of September. 

Furthermore, the downside for the USD seems cushioned in the wake of growing acceptance that the Federal Reserve (Fed) will proceed with modest rate cuts as the economy remains on solid footing. Apart from this, expectations that the Reserve Bank of New Zealand (RBNZ) will cut rates aggressively amid a fall in domestic inflation to the central bank's target range of 1% to 3% in the third quarter should cap the NZD/USD pair.

Even from a technical perspective, the recent breakdown below the very important 200-day Simple Moving Average (SMA) suggests that the path of least resistance for spot prices remains to the downside. Hence, any subsequent move up might still be seen as a selling opportunity. Traders now look to the US housing market data and Fed Governor Christopher Waller's speech for a short-term impetus heading into the weekend.