NEW ZEALAND DOLLAR HOLDS POSITIVE GROUND AMID RISING FED RATE CUT EXPECTATIONS

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  • The New Zealand Dollar extends its rally in Monday’s Asian session. 
  • Rising bets of a Fed rate cut in September drag the USD lower and support the pair. 
  • Traders await New Zealand’s Trade Balance data and the PBoC interest rate decision on Tuesday for fresh impetus.

The New Zealand Dollar (NZD) gathers strength on Monday. The weaker US housing data on Friday has added to concerns over the US economy's strength, especially after recent softer inflation and labor reports. Traders place more bets on interest rate cuts from the US Federal Reserve in September, which undermine the US Dollar (USD) and create a tailwind for NZD/USD

However, the dovish stance of the Reserve Bank of New Zealand (RBNZ) after a surprise rate cut last week might weigh on the Kiwi as the easing cycle came much sooner than expected. Additionally, any signs of a weaker Chinese economy might cap the upside for China’s proxy NZD as China is New Zealand's largest trading partner. 

Traders will monitor New Zealand’s Trade Balance data and the People’s Bank of China’s (PBoC) interest rate decision on Tuesday. The highlight this week will be Fed Chair Powell's speech at the Jackson Hole symposium on Friday. This event might offer some hints about guidance on the pace of Fed easing. 


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