NZD/USD remains weak below 0.5900, all eyes on US PCE data

• NZD/USD weakens near 0.5890 in Friday’s early Asian session. 
• The US GDP expanded at a 2.8% annualized pace in Q2, above the 2.1% forecast.
• Disappointed Chinese data and growing odds of a rate cut by the RBNZ drag the Kiwi lower. 

The NZD/USD pair remains under some selling pressure around 0.5890 during the early Asian session on Friday. The stronger US economic data has trimmed some rate cut expectations in September, which provides some support for the US Dollar (USD). Later on Friday, the release of the Personal Consumption Expenditures (PCE) - Price Index for June will be in the spotlight. 

Economic activity in the United States was firmer than expected during the second quarter (Q2), the US Bureau of Economic Analysis reported on Thursday. US Gross Domestic Product (GDP) grew at 2.8% annualized pace adjusted for seasonality and inflation from 1.4% in the previous reading, exceeding forecasts of 2%. 

Federal Reserve (Fed) officials are expected to hold interest rates steady at its upcoming monetary policy meeting next week, and market pricing forecast the first cut in September. 

Investors will take more cues from the US PCE data for June, which is likely to drop. Inflation as measured by Personal Consumption Expenditures likely fell in June, according to forecasts, mirroring the trend seen in a different inflation report earlier this month. The softer PCE inflation data could pave the way for the Fed to lower its key interest rate as soon as September and weaken the Greenback. 

On the Kiwi front, the rising bets that the Reserve Bank of New Zealand (RBNZ) would cut its key Official Cash Rate (OCR) in August weigh on the New Zealand Dollar (NZD). Furthermore, the fear of a Chinese economic slowdown continues to undermine the Kiwi as China is a major trading partner of New Zealand.