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NZ dollar hits highest since June as US dollar weakens

NZD/USD is up 0.6% to about 0.5980, helped by reduced expectations for an immediate Fed rate hike.

Reported · Written up by our desk · Major Pairs

The New Zealand dollar extended its rise against the US dollar, with NZD/USD trading around 0.5980, up 0.62% on the day and at its highest level since early June, according to FXStreet.

FXStreet links the move primarily to persistent weakness in the US Dollar. The US Dollar Index fell 0.23% to 98.65, as investors pared back expectations for an immediate Federal Reserve interest rate hike, even though the latest FOMC minutes kept a relatively hawkish tone.

Meanwhile, the NZ dollar got support from expectations that the Reserve Bank of New Zealand could deliver another rate hike. The widening gap between fading bets on near term Fed tightening and prospects for further RBNZ action has helped underpin NZD/USD.

Looking ahead, FXStreet notes that New Zealand trade data in July showed a monthly deficit of NZ$1,949M, but traders focused more on the interest rate outlook and US dollar drivers. Attention also turns to preliminary S&P Global US PMI readings for August, with the Manufacturing PMI forecast at 53.8 and the Services PMI expected at 54.0, where any weakness could add pressure to the US dollar, while stronger data could stabilize it. FXStreet also flags geopolitical risks around the Strait of Hormuz that could revive demand for the safe haven US dollar if tensions worsen.

Latest closeDollar index 99.64 ▼0.3%

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