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New Zealand dollar slips as hotter NZ inflation boosts RBNZ bets
NZD/USD was around 0.5835, down 0.07% on the day, even after New Zealand CPI beat expectations and lifted forecasts for more RBNZ tightening.
The New Zealand dollar edged lower on Tuesday against the US dollar, with NZD/USD trading around 0.5835 and down 0.07% on the day, despite support from hotter-than-expected New Zealand inflation data.
Statistics New Zealand reported that CPI rose 1.5% quarter over quarter in the second quarter, up from 0.9% previously and above the 1.4% market consensus. On an annual basis, inflation accelerated to 4.1% year over year from 3.1%, exceeding the expected 4.0% and reaching the highest level since December 2023, FXStreet said.
The stronger print reinforced expectations that the Reserve Bank of New Zealand will keep tightening policy. After the RBNZ raised the Official Cash Rate by 25 basis points to 2.5% in July, markets expect additional hikes in either October or December and another increase in February 2027, according to Bloomberg.
FXStreet also attributed the Kiwi’s limited upside to the resilience of the US dollar, supported by safe-haven demand amid ongoing tensions in the Middle East and US military actions around Iran. In the US, Fed expectations were bolstered by data pointing to a more accommodative stance, with CME FedWatch pricing an 84.5% chance the Fed holds rates unchanged at its July 29 meeting, and ADP showing private employers added 16.5K jobs per week in early July.