NZD/USD posts modest gains above 0.5850 as traders await Fed's Powell speech, US PMI data

• NZD/USD strengthens near 0.5865 in Tuesday's early Asian session.
• Fed slashed interest rates last week and tentatively forecast two more reductions before the end of 2025.
• New Zealand is set to announce a new RBNZ governor on Wednesday. 

The NZD/USD pair gathers strength around 0.5865 during the early Asian session on Tuesday. The US Dollar (USD) softens against the New Zealand Dollar (NZD) on growing expectations of a further rate cut from the US Federal Reserve (Fed). The preliminary reading of the US S&P Global Purchasing Managers Index (PMI) reports for September will be in the spotlight later in the day. Also, Fed Chair Jerome Powell is set to speak.  

The Fed cut its key interest rate by 25 basis points (bps) at its September meeting and signaled that more reductions are likely this year. The Fed's updated projections imply that two more quarter-points are likely before the year's end. Nonetheless, Fed's Powell emphasized that the path forward is not pre-set and will depend on incoming economic data. 

Traders brace for a series of Fed speeches later this week, including remarks from Fed Chair Jerome Powell on Tuesday for fresh impetus. Any dovish remarks from Fed officials could drag the Greenback lower and create a tailwind for the pair in the near term. 

Bloomberg reported earlier on Tuesday that the New Zealand government is set to announce its new Reserve Bank of New Zealand (RBNZ) governor, with an announcement planned for Wednesday. The source said the central bank might appoint a woman to head the central bank for the first time.

The People's Bank of China (PBoC) kept its benchmark lending rates unchanged for the fourth straight month on Monday despite the Fed interest rate cut last week. China's economic slowdown worsened in August, with a slew of economic data missing expectations. Retail Sales dropped to 3.7% in August as consumption remained sluggish, while Industrial Production eased to 5.2%, its lowest level since August last year. This, in turn, could undermine the China-proxy Kiwi, as China is a major trading partner of New Zealand.