Ella 
During the Asian session on Tuesday, NZD/USD fell to around 0.5950, extending losses for the second consecutive trading day. The U.S. dollar (USD) began to regain recent losses on Monday as U.S. Treasury yields rose.
The U.S. dollar index rebounded from two-month lows to trade higher near 105.40. In addition, the 10-year U.S. Treasury yield rebounded from last Friday’s six-week low and was hovering around 4.63% at press time.
Speculation that the Federal Reserve may pause its tightening of monetary policy pushed NZD/USD sharply higher. This market expectation was boosted by the Federal Reserve’s dovish policy decision last week and U.S. employment data that was worse than expected, indicating a weak labor market. In addition, market participants believe that the Federal Reserve will introduce multiple interest rate cuts by the end of 2024.
On the NZD side, NZD/USD may come under pressure due to the impact of employment data. New Zealand’s employment rate fell to -0.2% in the third quarter, compared with expectations for a rise of 0.4%. Meanwhile, the unemployment rate rose as expected, to 3.9% from 3.6% previously. The data suggests the Reserve Bank of New Zealand (RBNZ) is likely to keep policy rates on hold in November.
Market participants are likely to keep a close eye on China’s October trade balance data due to be released later in the day. If China’s October trade balance beats expectations, it could boost NZD/USD. Investors will also focus on New Zealand’s fourth-quarter inflation expectations on Wednesday.
