Nzdusd Returns Higher

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Nzdusd Returns Higher

Nzd/Usd Returns To 0.5950 On Us Dollar Retreat

NZD/USD has once again recovered after dropping to 0.5850 on Monday. The recent rebound in the Kiwi comes after hitting a fresh 9-month low, which can be attributed to technical correction.

However, there's also a fundamental reason behind the rebound in the NZD/USD. As of late, the rumors of an emergency rate cut by the US Federal Reserve have surfaced and now everyone is talking about it.

Nzd/Usd Turns Bullish In Short-Term

With the US economy going through a phase of slowdown, the easiest fix for the US Federal Reserve is to cut rates out of schedule. So, that's a key reason why the NZD/USD has returned back to 0.5950 after hitting multi-month lows.

Recently, Chicago Fed 'Goolsbee' gave an interview where he talked about the possibility of emergency rate cuts. Although the US Federal Reserve makes its decisions after a thorough discussion and based on data, these comments were still very relevant.

quick look at the US economy shows that the recession is just around the corner. So, it is only natural for the market participants to adopt a more risk-averse approach.

The uptick of the jobless rate to 4.3% along with the contraction in the manufacturing sector have also weighed heavily on the greenback. For now, the DXY is seen with a -1% change for the day near the 102.00s.

On the New Zealand front, the Q2 employment data is expected to be released on Wednesday. According to estimates, New Zealand's unemployment rate will jump to 4.7% against the earlier reading of 4.3$.

Similarly, the annual labor cost index is also expected to drop down to around 3.5% against the earlier reading of 3.8%. Overall, the labor market conditions are expected to show signs of a cooldown which would also push the RBNZ to lower the rates.

The bigger picture now favors neither the NZD nor the USD, as both of these economies are under pressure due to high rates.

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