NZD/USD remains below 0.6100 as US Dollar appreciates on rising risk aversion

• NZD/USD edges lower as the US Dollar gains support from the fading likelihood of further bumper rate cuts by the Fed.
• Fed's Kashkari reiterated the central bank's data-dependent approach, highlighting the ongoing easing of inflationary pressures alongside a strong labor market.
• New Zealand's Consumer Price Index is anticipated to return to the central bank's 1-3% target range for the September quarter.

NZD/USD halts its three-day winning streak, trading around 0.6080 during the Asian hours on Tuesday. This downside could be attributed to the stronger US Dollar (USD), which gains support from fading expectations that the US Federal Reserve (Fed) will implement aggressive interest rate cuts following a strong jobs report and concerns about sticky US inflation.

The US Dollar Index (DXY), which measures the value of the US Dollar against its six other major peers, extends its winning streak for the sixth consecutive day on Tuesday. The DXY trades around 103.30 with 2-year and 10-year standing at 3.96% and 4.09%, respectively, at the time of writing.

On Monday, Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari reaffirmed the Fed's data-dependent approach. Kashkari reiterated familiar Fed policymaker views on the strength of the US economy, noting continued easing of inflationary pressures and a robust labor market, despite a recent uptick in the overall unemployment rate, per Reuters.

The New Zealand Dollar (NZD) weakened following Monday's disappointing trade balance data from China, New Zealand's largest trading partner. Additionally, despite the announcement of China's fiscal stimulus plan over the weekend, the Kiwi Dollar did not gain traction, as investors remained uncertain about the extent of the package.

China's trade surplus narrowed in September, with the Trade Balance recorded at 81.7 billion, falling short of the 89.8 billion expected and down from the previous 91.02 billion. Exports increased by 2.4% year-over-year, significantly lower than the anticipated 6.0% and down from 8.7% in the prior period. Meanwhile, Imports grew by 0.3%, below the expected 0.9% and the previous increase of 0.5%.

Investors are likely anticipating the release of New Zealand's third-quarter inflation data on Wednesday. The Consumer Price Index (CPI) is expected to fall back within the central bank's 1-3% target range, decreasing to 2.2% year-over-year for the September quarter from the previous 3.3% reading.

The New Zealand Dollar is under downward pressure as markets anticipate an 80% likelihood that the Reserve Bank of New Zealand (RBNZ) will execute another half-point rate cut at its final meeting of the year in November.