NZD/USD strengthens to near 0.5850 ahead of US NFP data

• NZD/USD gathers strength to near 0.5850 in Friday's early Asian session, adding 0.14% on the day. 
• US Initial Jobless Claims rose to 237K last week. 
• The US August Nonfarm Payrolls report will be the highlight later on Friday. 

The NZD/USD pair attracts some buyers to around 0.5850 during the early Asian session on Friday. The softer-than-expected US job data continue to weigh on the US Dollar (USD). All eyes will be on the US Nonfarm Payrolls (NFP) report for August, which is due later on Friday. 

Data released by the US Department of Labour (DOL) on Thursday showed that Initial Jobless Claims for the week ending August 30 climbed to 237K, compared to the previous reading of 229K. This figure came in above the market consensus of 230K. Meanwhile, US private sector employment rose 54,000 in August, according to the Automatic Data Processing (ADP). This reading followed a 106K (revised from 104K) increase recorded in July and came in below the expectation of 65K.

These job reports suggested labor market weakness and reinforced expectations that the Federal Reserve (Fed) will cut rates this month, which undermines the Greenback and creates a tailwind for the pair. The attention will shift to the US employment report. The US economy is estimated to add 75K jobs in August, while the Unemployment Rate is projected to tick up to 4.3% in August. Any signs of a weakening labor market could drag the USD lower as it prompts bets on the Federal Reserve (Fed) to further unwind its restrictive policy. 

However, the dovish policy expectations of the Reserve Bank of New Zealand (RBNZ) might undermine the Kiwi. The RBNZ has been aggressively cutting rates since August 2024 and signaled that further cuts could be coming. Analysts are currently expecting two more rate reductions from the New Zealand central bank, which would bring the Official Cash Rate (OCR) down to 2.50%, the lowest level since mid-2022.