NZD/USD strengthens near 0.6200, all eyes on Fed rate decision

• NZD/USD gains ground near 0.6190 in Wednesday's early Asian session. 
• The Fed is anticipated to reduce its borrowing costs on Wednesday. 
• New Zealand's GDP will be released on Thursday, and it is projected to contract by 0.4% QoQ in Q2. 

The NZD/USD pair attracts some buyers around 0.6190 on Wednesday during the early Asian session. The resumption of the US Dollar (USD) weakness amid firmer bets of the Federal Reserve (Fed) rate cut provides some support to the pair. Investors will closely monitor the Fed interest rate decision on Wednesday. 

The Fed will likely cut interest rates at its September meeting on Wednesday after holding the rate steady within a target of 5.25% and 5.5% since July 2023. Fed Chair Jerome Powell said at Jackson Hole, "The time has come for policy to adjust." He further stated that  "the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks."

Fed officials will also release a Summary of Economic Projections, or 'dot-plot' after the policy meeting, which could give insight into just how much the US central bank plans to cut over the next year. The expectation of the jumbo rate cuts might exert some selling pressure on the Greenback in the near term.

On the Kiwi front, a bleak outlook in the Chinese economy after the disappointing economic data might cap the upside for the China-proxy New Zealand Dollar (NZD). Investors will take more cues from New Zealand's Gross Domestic Product (GDP) for the second quarter (Q2), which is due on Thursday. The GDP number is estimated to contract by 0.4% quarter-on-quarter in Q2 following a 0.2% expansion in Q1. However, a surprise upside in GDP reading could boost the NZD against the USD.