NZD/USD attracts some buyers above 0.5900 as Fed rate cut bets remain intact

• NZD/USD gathers strength to near 0.5935 in Monday's early European session, up 0.20% on the day. 
• Financial markets currently expect a rate cut at the Fed's September 16-17 meeting. 
• The RBNZ is anticipated to cut its OCR to 3.0% from 3.25% on Wednesday. 

The NZD/USD pair gains traction to around 0.5935 during the early European session on Monday. The US Dollar (USD) edges lower against the New Zealand Dollar (NZD) as anticipation mounts of a Federal Reserve (Fed) interest rate cut. Investors await the Reserve Bank of New Zealand (RBNZ) interest rate decision and the release of FOMC Minutes later on Wednesday. 

The Greenback remains weak as US economic data keep the case for a September Federal Reserve (Fed) interest rate cut intact. According to the CME FedWatch tool, markets are now pricing in an 84% odds the Fed would reduce rates by a quarter point next month, down from 98% last week. 

US Retail Sales increased solidly in July, though a softening labor market and higher goods prices could curb consumer spending growth in the third quarter. Additionally, a survey from the University of Michigan on Friday showed that Consumer Inflation Expectations, which  increased in August, further dimmed the possibility of an oversized interest rate cut by the US central bank in the September meeting. 

Traders will take more cues from the Jackson Hole Economic Policy Symposium, with Fed Chair Jerome Powell's speech keenly watched for guidance on a September interest-rate cut after recent US data.

Data released by Business NZ on Monday showed that New Zealand's Performance of Services Index (PSI) improved to 48.9 in July from 47.6 in June (revised from 47.3). This upbeat data provides some support to the Kiwi against the USD. 

The RBNZ is expected to lower the official cash rate to 3.0% from 3.25% at its August meeting on Wednesday, bringing the total easing cycle to 250 basis points (bps). Investors also see a chance for another cut to 2.75% early next year, with attention on the RBNZ's updated rate outlook. The dovish remarks from the New Zealand central bank could undermine the NZD in the near term.