NZD/USD Holds Above 0.5900 Following China PMI, Awaits Fed Decision

This upward movement is attributed to a dovish sentiment regarding the Federal Reserve's interest rate path, with expectations of an unchanged rate decision today but a potential rate cut in September.

Market Sentiment:

The US Dollar is under pressure due to mounting expectations of multiple rate cuts by the Fed this year, fueled by signs of cooling inflation and a softening labor market. Meanwhile, the New Zealand Dollar found support from the release of China's Manufacturing Purchasing Managers' Index (PMI) data for July, which exceeded expectations, albeit slightly.  

Economic Data:

In New Zealand, building permits saw a significant decline in June, while the ANZ Business Confidence index surged to its highest level since February. However, weak inflation and labor data have led to increased speculation of an early rate cut by the Reserve Bank of New Zealand (RBNZ).  

China's NBS Manufacturing PMI for July came in slightly above expectations, offering a glimmer of hope for the New Zealand market, given the close trade ties between the two countries.

Overall Outlook:

The NZD/USD pair is likely to remain sensitive to upcoming developments in both the US and Chinese economies. The Fed's policy decision and subsequent commentary will be crucial in shaping the pair's short-term trajectory. Additionally, any further signs of weakness in the Chinese economy could weigh on the New Zealand Dollar.