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NZD/USD firms after hawkish RBNZ Chief Economist comments

The Reserve Bank of New Zealand Chief Economist said inflation may not slow as quickly as forecast, lifting bets for more tightening after the July 8 hike.

Reported · Written up by our desk · Major Pairs

The New Zealand dollar strengthened against the US dollar in the Asian session, with NZD/USD rising to the 0.5780 area after hawkish remarks from Reserve Bank of New Zealand Chief Economist Paul Conway.

FXStreet said Conway indicated New Zealand inflation may not ease as quickly as the central bank expects, increasing the odds of additional policy tightening following the first RBNZ rate increase in three years on July 8.

Markets are pricing nearly 50 basis points of further rate hikes over the next year, which supported the Kiwi even as the US dollar remained firm.

The broader US backdrop is tied to escalating US-Iran tensions and Fed rate hike expectations, while traders also await US consumer inflation data and scrutiny of Fed Chair Kevin Warsh’s congressional testimony later in the day.

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