NZD/USD falls toward 0.6100 as Vice President Joe Biden aims to raise taxes on the rich and China's CPI is in focus

The NZD/USD pair was unable to recapture the crucial resistance level of 0.6120 during the Asian session. The New Zealand dollar is falling toward the round-number support of 0.6100 as the news that US President Joe Biden has proposed increasing the corporate tax rate from 21% to 28% has bolstered bearish market sentiment.

US Vice President Joseph Biden proposes a 25% tax on billionaires and steep levies on affluent investors. He has also proposed a 39.6% tax on incomes over $400,000 in the budget. The United States' fiscal policy appears to be kicking in to prevent the Consumer Price Index (CPI) from flexing its muscles further. By diminishing market liquidity, higher taxes may have a significant effect on consumer spending.

As a consequence of the news that wealthy Americans will be taxed more heavily, the S&P 500 futures are also under duress. The futures for the 500 largest U.S. stocks are falling during the Asian session. It appears that market participants will use Wednesday's insignificant recovery move as a selling opportunity.

In response to Vice President Biden's proposal for higher tariffs, the US Dollar Index (DXY) may experience some upward movement. The USD Index is presently hovering above 105.20 and is anticipated to resume its upward trend.

This week, the US Nonfarm Payrolls (NFP) data will remain in the spotlight. According to the consensus, the US economy added 203K new employment in February, which is less than the previous record-breaking release of 517K. The unemployment rate is anticipated to remain unchanged at 3.4%. Investors are concerned about the Average Hourly Earnings data, which is expected to increase to 4.8% on an annual basis from the previous release of 4.4%. An increase in the labor cost index will increase the likelihood of the Federal Reserve raising interest rates more significantly (Fed).

Investors are keeping an eye on China's Consumer Price Index (CPI) data. China's CPI is anticipated to decrease to 1.9% from the previous annual rate of 2.1%. The monthly CPI is expected to decrease to 0.2% from the previous release of 0.8%. If inflation declines, the Chinese government and the People's Bank of China (PBOC) may be forced to infuse more liquidity into the economy.

Notably, New Zealand is one of China's primary trading partners, and an increase in liquidity in the Chinese economy will increase demand for the New Zealand Dollar.