Ella 
NZD/USD was trading higher near 0.5900 during early European trading on Tuesday. The New Zealand dollar (NZD) rebounded against the US dollar (USD) after hitting a three-month low of 0.5857 on Monday.
NZD/USD is likely to appreciate further as the US Federal Reserve (Fed) is expected to keep interest rates unchanged on Wednesday. However, traders expect the Fed to cut interest rates in September, with the CME FedWatch tool showing a 100% chance of a cut of at least a quarter of a percentage point.
In addition, signs of cooling U.S. inflation and easing labor market conditions have also fueled expectations that the Federal Reserve will cut interest rates three times this year. However, Bank of America said last week that strong economic growth in the United States made it “affordable for the Federal Open Market Committee (FOMC) to wait” before making any changes. The bank noted that the economy “remains on strong fundamentals” and continued to expect the Federal Reserve to begin cutting interest rates in December.
Traders are also looking forward to key U.S. data this week. Nonfarm payrolls are expected to increase by 175,000 jobs in July, down from 206,000 in June. The unemployment rate is expected to hold steady at 4.1%, the same as the 2021 high. Additionally, average hourly earnings are expected to increase by 0.3% quarter-to-quarter.
On the NZD side, China’s disappointing GDP data and last week’s surprise rate cut by the People’s Bank of China (PBOC) further added to selling pressure on the New Zealand dollar (NZD) as New Zealand and China are close trading partners. Any changes in China’s economy may affect the New Zealand dollar market.
However, rising bets that the Reserve Bank of New Zealand (RBNZ) will cut interest rates early next week continue to weigh on the New Zealand dollar. Markets put a 44% chance of the central bank cutting interest rates at its August meeting.
