NEW ZEALAND DOLLAR EXTENDS ITS LOSSES ON DOVISH RBNZ

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  • The New Zealand Dollar trades on a weaker note in Friday’s early Asian session.
  • RBNZ cut its rate for the first time since March 2020 and flags more cuts ahead, dragging the Kiwi lower.
  • Investors await RBNZ Governor Orr's speech ahead of the US economic data on Friday.

The New Zealand Dollar (NZD) loses traction on Friday despite the consolidation of the Greenback. The Kiwi has traded in negative territory for the third consecutive day, pressured by a surprise rate cut by the Reserve Bank of New Zealand (RBNZ) and its dovish stance. Furthermore, the cautious mood amid the elevated geopolitical risks in the Middle East might weigh on riskier assets like the NZD.

On the other hand, the expectation of a Federal Reserve (Fed) interest rate cut in September might undermine the USD and create a tailwind for NZD/USD. The market is now fully priced for a 25 basis points (bps) Fed rate cut in September and nearly 20% priced for a 50 bps cut. Traders will take more cues from the Fed's Austan Goolsbee speech later on Friday. Also, the preliminary US Michigan Consumer Sentiment Index for August, Building Permits and Housing Starts will be released. On the NZD docket, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr is set to speak.


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