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Weak economic data fuels expectations of a rate cut, sending the New Zealand dollar plummeting to a one-week low. The New Zealand dollar (NZD) fell sharply on Thursday, dropping 0.82% to 0.5910, hitting a one-week low. It is currently trading around 0.5928. This is primarily due to the exceptionally weak latest economic data, which reinforced market expectations of a more aggressive rate cut by the Reserve Bank of New Zealand (RBNZ). Meanwhile, the Australian dollar also fell slightly, currently trading around 0.6645. Australia's unexpectedly weak employment data supports further rate cuts, though such an adjustment is more likely to occur in November. Economic fundamentals are fueling market bets on monetary policy easing. New Zealand's economy contracted more sharply than expected in the second quarter, primarily due to continued weakness in the construction sector and global economic uncertainty. Market expectations are that the RBNZ will likely cut interest rates by 25 basis points to 2.75% at its October 8th meeting, with some even expecting a 50 basis point cut. 3. Kelly Eckhold, chief economist of Westpac Banking Corporation in New Zealand, pointed out that the weak economic situation has strengthened the central bank's reasons to increase stimulus. The bank expects the Reserve Bank of New Zealand to cut interest rates by 50 basis points and 25 basis points in October and November respectively. 4. In Australia, the number of employed people unexpectedly decreased in August, full-time employment fell after growing in July, and the unemployment rate remained stable, reflecting a gradual slowdown in the labor market. The market expects that the probability of the Reserve Bank of Australia cutting interest rates at the September 30 meeting is low, only 20%, while the probability of cutting interest rates by 25 basis points in November has risen to 70%. Overall, the expectation of loose monetary policy in Australia and New Zealand continues to dominate the foreign exchange market.