• NZD/USD extends its upside following the PBoC’s interest rates decision on Friday.
• The PBoC holds its current one-year and five-year Loan Prime Rates (LPRs) at 3.35% and 3.85%, respectively.
• The US Dollar struggles amid growing expectations of further Federal Reserve rate cuts in 2024.

NZD/USD continues its winning streak for the third successive day, trading around 0.6250 during the early European hours on Friday. The New Zealand Dollar (NZD) gains ground following the interest rate decision by the People’s Bank of China (PBoC).

The PBoC opted to keep its one-year and five-year Loan Prime Rates (LPRs) unchanged at 3.35% and 3.85%, respectively. As close trade partners, any developments in the Chinese economy can significantly impact Kiwi markets.

In New Zealand, recent data showed that the Gross Domestic Product (GDP) shrank by 0.2% quarter-on-quarter in the second quarter, bringing the economy close to recession. This decline was smaller than the anticipated 0.4% contraction. Year-on-year, the economy contracted by 0.5%, as expected. Markets have already fully priced in another 25 basis point rate cut for October.

The US Dollar remains under pressure as expectations grow for additional rate cuts by the US Federal Reserve by the end of 2024. The latest dot plot projections indicate a gradual easing cycle, with the median rate for 2024 revised down to 4.375% from the June forecast of 5.125%.