NZD/USD holds above 0.5900 on upbeat Chinese PMI data

• NZD/USD posts modest gains around 0.5905 in Tuesday's early Asian session.
• Markets expect the Fed to cut the interest rate in the September meeting.
• China's August Caixin Manufacturing PMI supports the New Zealand Dollar. 

The NZD/USD pair trades in positive territory near 0.5905 during the early Asian session on Tuesday. The upbeat China's August Caixin Manufacturing Purchasing Managers Index (PMI) report provides some support to the Kiwi. Traders await the US August ISM Manufacturing PMI report, which is due later on Tuesday. 

The US Commerce Department noted on Friday that US inflation, as measured by the Personal Consumption Expenditures (PCE), rose in July, indicating that US President Donald Trump's tariffs are working their way through the US economy. However, markets expect the Federal Reserve (Fed) to resume lowering its benchmark interest rate this month. This, in turn, might drag the US Dollar (USD) lower and create a tailwind for the pair.

China's Manufacturing PMI rose to 50.5 in August from 49.5 in July, according to Caixin Insight Group on Monday. This figure came in better than the estimation of 49.5. This encouraging China PMI report underpins the China-proxy Kiwi, as China is a major trading partner of New Zealand. 

Meanwhile, trade uncertainty might cap the New Zealand Dollar's (NZD) upside. Traders will closely monitor the developments surrounding US tariffs. On Friday, the US Court of Appeals for the Federal Circuit upheld a ruling that the sweeping tariffs the US President Donald Trump unilaterally imposed on most other countries were illegal. 

The decision impacts Trump's so-called "reciprocal" tariffs on most nations across the globe, including additional levies placed on China, Mexico, and Canada.