- NZD/USD strengthens to near 0.5970 in Wednesday’s early European session, up 0.30% on the day.
- Rising Fed rate cut bets in September weigh on the US Dollar.
- Trump announced another 90-day pause on China tariffs.
The NZD/USD pair attracts some buyers to around 0.5970 during the early European session on Wednesday, bolstered by a softer US Dollar (USD). Traders raise their bets that the US Federal Reserve (Fed) will cut its interest rate in the September meeting. Fed policymakers are scheduled to speak later on Wednesday, including Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic.
Data released on Tuesday showed cooler-than-expected inflation in the United States (US), prompting traders to raise bets of more interest rate cuts than previously expected this year. This, in turn, undermines the Greenback and acts as a tailwind for the pair.
The US Consumer Price Index (CPI) came in line with expectations, rising 2.7% on a yearly basis in July, the US Bureau of Labor Statistics (BLS) revealed on Tuesday. Meanwhile, the annual core CPI climbed by 3.1% in July versus the 2.9% rise prior and beat the estimates of 3.0%.
US President Donald Trump on Monday extended a tariff truce with China for another 90 days, just hours before the last agreement between the world’s two largest economies was due to expire. China’s Commerce Ministry stated that the country will suspend additional tariffs on US goods for 90 more days, after Trump signed an executive order extending the tariff truce.
Analysts believe that some uncertainty lifts, but the trade tensions may not. Any signs of renewed trade tensions could exert some selling pressure on the China-proxy Kiwi, as China is a major trading partner of New Zealand.
