NZD/USD maintains position near 0.5950 ahead of US NFP Benchmark Revision

• NZD/USD remains stronger amid rising odds of a bumper Fed rate cut in September.
• Traders await the US Nonfarm Payrolls Benchmark Revision for guidance on the Fed rate cut size.
• The New Zealand Dollar may face challenges as the RBNZ may deliver another rate cut in October.

NZD/USD extends its winning streak for the third consecutive session, trading around 0.5950 during the Asian hours on Tuesday. The pair appreciates as the US Dollar (USD) struggles after last week's weaker-than-expected August jobs data has bolstered expectations that the US Federal Reserve (Fed) may deliver a bumper 50-basis-point interest rate cut in September.

The CME FedWatch tool indicates a pricing in nearly 88% of a 25-basis-point (bps) rate cut by the Fed at the September policy meeting, up from 86% a week ago, with nearly 12% odds of a potential 50 bps reduction this month.

Traders will likely watch the US Nonfarm Payrolls Benchmark Revision due later in the day. It is worth noting that in August 2024, the BLS released the preliminary annual benchmark revisions with 818,000 new jobs added, fewer jobs than originally reported in the 12 months through March 2024. In response, the Fed lowered the policy rate by 50 basis points (bps) in September 2024, bringing the fed funds rate to 5% from 5.5%.

Read full article: Will Nonfarm Payrolls revisions hint at a 50 bps Fed cut next week?

Traders will turn their focus on two key inflation reports from the United States (US) that could shape the interest rate outlook. The August US Producer Price Index (PPI) is scheduled for release on Wednesday, with expectations that the headline PPI for August to rise 3.3% year-on-year, while the core measure is projected to increase 3.5% over the same period. Focus will shift toward Thursday's Consumer Price Index (CPI).

However, the NZD/USD pair may face challenges as the New Zealand Dollar (NZD) could receive downward pressure amid rising expectations of another rate cut by the Reserve Bank of New Zealand (RBNZ) in October, following August's decision of a 25-basis-point rate cut. The dovish sentiment is strengthened due to the growth risks that appear after a decline in second-quarter consumer spending.