NZD/USD pares losses and approaches 0.5900 ahead of the US NFP release

• New Zealand Dollar appreciates 0.5% to 0.5875 but remains on track for a moderate weekly loss.
• The US Dollar loses ground across the board as bets of Fed cuts rise ahead of the US NFP release.
• Hopes of further RBNZ monetary easing are keeping Kiwi rallies limited.

The New Zealand Dollar reverses previous losses on Friday, buoyed by a mild appetite for risk and the US Dollar's weakness as investors take positions for a soft US Nonfarm Payrolls report that would consolidate hopes of Fed interest rate cuts.

The NZD/USD pair is trading at the 0.5875 area ahead of Friday's US session opening, after bouncing from 0.5835 on Thursday. The broader trend, however, remains neutral, with the pair trading sideways within a 100-pip range below 0.5930.

Weak US data has boosted Fed cuts' hopes

A string of weaker-than-expected employment releases seen earlier this week has underscored the image of a softening labour market, increasing pressure for the Fed to focus on job creation, as inflation pressures remain at moderate levels.

Most Fed policymakers have supported that view to a greater or lesser extent, in some cases calling for immediate rate cuts to support economic growth. The market has reacted, ramping up bets for Fed easing in September, practically fully priced ahead of the NFP release, which has weighed on the US Dollar as of late.

The New Zealand Dollar drew some support from positive service data from China, New Zealand's major trade partners, but upside attempts have remained limited, as investors price in further RBNZ easing for the coming months. New Zealand's central bank cut its benchmark interest rate to a three-year low of 3% in late August and hinted at further cuts, citing economic headwinds.