NZD/USD softens to near 0.5950 as China's deflation concerns persist

• NZD/USD weakens to around 0.5950 in Wednesday's early Asian session.
• Softer than expected US CPI data has strengthened expectations that the Fed may cut the interest rate in September. 
• China's July PPI fell more than expected, underscoring weak demand and ongoing trade uncertainty.

The NZD/USD pair loses traction near 0.5950 during the early Asian session on Wednesday. The New Zealand Dollar (NZD) softens against the US Dollar (USD) despite rising bets for a Federal Reserve (Fed) September rate cut. Traders will take more cues from Fedspeak later on Wednesday. 

Investors continue to assess the latest US inflation readings amid speculation of two interest rate cuts by the Fed in the latter half of the year. Fed officials have recently expressed growing concerns about the labor conditions, which might lead to interest rate cuts and could drag the Greenback lower and cap the downside for the pair. 

Markets are now pricing in nearly a 94% possibility of a rate cut next month, up from 85% odds before the Consumer Price Index (CPI) data release, according to the CME's FedWatch tool. Traders also raise their bets on rate cuts in October and December.

China's Producer Price Index (PPI) fell 3.6% year-on-year in July, extending a two-year decline and missing estimates. This report suggested that weak domestic demand and global trade uncertainty continued to weigh on the economy. Concerns over persistent deflationary pressure in China might undermine the China-proxy Kiwi, as China is a major trading partner of New Zealand.