NZD/USD refreshes six-month low near 0.5700 despite receding US-China trade tensions

• NZD/USD slides to near 0.5700, the lowest level seen in six months.
• Investors expect the RBNZ to cut interest rates again this year.
• Fed's Powell is expected to provide cues on the pace of monetary easing in the remaining year.

The NZD/USD pair posts a fresh six-month low near 0.5700 during the late Asian trading session on Tuesday. The Kiwi pair faces selling pressure, even as trade tensions between the United States (US) and China have receded, and both President Donald Trump and leader XI Jinping are on track to meet late in October in South Korea.

The scenario of receding trade tensions between the US and China is favorable for the New Zealand Dollar (NZD), given that the New Zealand (NZ) economy relies heavily on its exports to Beijing.

The major downside factor for the Kiwi dollar is growing acceptance among market participants that the Reserve Bank of New Zealand (RBNZ) will cut interest rates again this year.

Last week, the RBNZ surprisingly reduced its Official Cash Rate (OCR) by 50 basis points (bps) to 2.5%, which showed officials are concerned over the economic outlook.

Meanwhile, the US Dollar (USD) trades subduedly as investors await the speech from Federal Reserve (Fed) Chair Jerome Powell at 16:20 GMT. Financial market participants will pay close attention to Powell's speech to get cues about how much the Fed will cut interest rates further this year.

According to the CME FedWatch tool, traders see a 94% that the Fed will reduce interest rates by 50 basis points (bps) to 3.50%-3.75% in the remaining year.