• NZD/USD climbs to near 0.6200 with the Fed policy meeting taking center stage.
• Traders raise bets supporting the Fed interest rate cuts by 50 bps to 4.75%-5.00%.
• The RBNZ is expected to cut interest rates in the November and December policy meetings.

The NZD/USD pair refreshes a weekly high of 0.6200 in Monday’s New York session. The Kiwi asset strengthens as the US Dollar (USD) has been hit hard by growing speculation that the Federal Reserve (Fed) would start the policy-easing cycle aggressively in its monetary policy meeting on Wednesday.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, tumbles below 100.70. According to the CME FedWatch tool, the likelihood of the Fed reducing the key interest rates by 50 basis points (bps) rose to 65% from 30% a week ago.

Market expectations for Fed sizable rate cuts have been prompted by the slower-than-expected United States (US) Producer Price Index (PPI) data for August, published last week. Annual headline producer inflation came in lower at 1.7% than estimates of 1.8% and July’s print of 2.1%.

Before the Fed’s policy announcement, investors will focus on the US Retail Sales data for August, which will be published on Tuesday. The Retail Sales data, a key measure of consumer spending, is estimated to have grown at a slower pace of 0.2% from 1% in July. A sharp slowdown in households’ spending momentum would weigh on the US Dollar.