Ella 
In Asia on Wednesday, NZD/USD continued to rebound to around 0.5915. NZD/USD fluctuated higher following China’s manufacturing Purchasing Managers Index (PMI) data for July, which was stronger than expected. The focus turns to the Federal Reserve’s (FED) interest rate decision scheduled to be announced on Wednesday.
Data released by the National Bureau of Statistics on Wednesday showed that China’s manufacturing purchasing managers’ index fell to 49.4 in July from 49.5 in June, higher than the expected 49.3. At the same time, the National Bureau of Statistics’ services purchasing managers’ index fell to 50.2 in July from 50.5 in the previous month, in line with expectations of 50.2. As China is New Zealand’s main trading partner, China’s purchasing managers’ index beat expectations, boosting the New Zealand dollar.
However, rising market speculation about an early interest rate cut by the Reserve Bank of New Zealand may limit the upside of NZD/USD in the short term. Investors are anticipating a rate cut from the Reserve Bank of New Zealand, with traders predicting a 14 basis point cut in August, indicating a 55% chance of a rate cut soon.
As for the U.S. dollar, the Federal Reserve will announce its interest rate decision later in the day and is expected to remain on hold. Traders will be closely watching comments from Federal Reserve Chairman Jerome Powell at a news conference as Fed officials are likely to pave the way for easing policy at their September meeting. Dovish speeches by Fed Chairman Powell may put some selling pressure on the US dollar and boost NZD/USD. Traders are currently pricing in a 100% chance of the Fed cutting interest rates by at least 25 basis points in September, according to the CME Group’s FedWatch tool.
