Ella 
During the North American session on Friday, the New Zealand dollar fell to around 0.6160 against the US dollar. NZD/USD fell despite weakness in the U.S. dollar (USD) as traders raised bets on a 50 basis point (bps) interest rate cut by the Federal Reserve on Thursday.
The U.S. Producer Price Index (PPI) report for August released on Thursday showed that the annual rate of producer inflation slowed further, and the debate over the scale of possible interest rate cuts by the Federal Reserve has resurfaced.
The odds of the Fed cutting interest rates by 50 basis points in September to 4.75%-5.00% rose sharply to 45% from 28% a day earlier, according to the CME FedWatch tool.
The PPI report showed that overall producer inflation increased by 1.7% for the year due to lower energy prices, below expectations of 1.8% and the previously reported 2.1%. Core producer prices, which strip out volatile food and energy prices, rose a steady 2.4%.
Slowing price increases at the factory gate for producers also fueled investor risk appetite. S&P 500 futures posted decent gains in early trading in New York. The U.S. Dollar Index (DXY), which tracks the dollar’s value against six major currencies, fell below the key support level of 101.00.
Meanwhile, rising speculation that the Reserve Bank of New Zealand (RBNZ) will cut interest rates significantly has caused the New Zealand dollar (NZD) to weaken. The Reserve Bank of New Zealand unexpectedly launched a policy easing cycle in August and is expected to cut the official cash rate (OCR) at every policy meeting for the remainder of the year.
