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NZD/USD falls after US CPI cools, risk sentiment stays fragile
US CPI eased to 3.4% year over year in July, matching forecasts and leaving the greenback’s reaction muted as geopolitical jitters weigh on higher beta currencies like the New Zealand dollar.
The New Zealand dollar slid against the US dollar, with NZD/USD retreating to around 0.5865 on Wednesday and down 0.25% on the day, as investors weighed a fresh US inflation reading and persistent risk concerns, according to FXStreet.
In the United States, consumer price inflation eased to 3.4% year over year in July from 3.5% in June, the Bureau of Labor Statistics said. Prices rose 0.1% month over month after a 0.4% decline in June, while core inflation increased 0.2% month over month and 2.5% year over year, and FXStreet reported the data broadly matched market expectations, limiting any shift in Federal Reserve rate outlook assumptions. FXStreet said the US Dollar Index, which tracks the dollar versus six major currencies, edged slightly lower after the release.
FXStreet also pointed to geopolitical uncertainty as a drag on risk-sensitive currencies. Reuters, cited by FXStreet, reported there were no talks underway to extend the US-Iran ceasefire, while attacks on vessels near key shipping routes and Trump’s call for Tehran to pay reparations to victims added to caution.
In New Zealand, FXStreet said domestic political uncertainty compounded the pressure on the NZD after Prime Minister Christopher Luxon survived a second leadership challenge in four months, with the general election less than three months away.
Latest closeDollar index 99.81 ▲0.0%