NZD/USD gains ground above 0.5700 on Fed's dovish remarks

• NZD/USD gains traction around 0.5730 in Friday's early Asian session. 
• US federal shutdown will extend into next week as the Senate failed to advance the GOP funding bill for a tenth time. 
• Rising US-China trade tensions might cap the pair's upside. 

The NZD/USD pair trades in positive territory near 0.5730 during the early Asian session on Friday. The ongoing US government shutdown and expectations of US interest rate cuts drag the US Dollar (USD) lower against the New Zealand Dollar (NZD). Traders will assess remarks from Federal Reserve (Fed) officials.

The US federal shutdown will extend into next week as the Senate failed to advance a Republican bill to extend government funding and end the shutdown for a tenth time on Thursday, the 16th day of the impasse. Fears of a prolonged shutdown could undermine the Greenback and create a tailwind for the pair.

Furthermore, dovish remarks from Fed policymakers also weigh on the USD. Fed Governor Christopher Waller said on Thursday that he favors another interest rate reduction at the upcoming policy meeting later this month. Meanwhile, the Fed's newest governor, Stephen Miran, again made his case for a more aggressive rate cut path than the one favored by his colleagues for 2025

Traders are currently pricing in nearly a 98% chance of a 25 basis points (bps) Fed rate cut in October, followed by another reduction in December, which is fully priced in, according to Reuters.

On the other hand, escalating US-China trade tension might cap the upside for the China-proxy Kiwi, as China is a major trading partner for New Zealand. Both countries will impose additional port fees on ships carrying cargo between them. This measure will likely raise trading costs and disrupt freight flows.