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New Zealand dollar rises as inflation boosts odds of September RBNZ hikes
NZD/USD trades near 0.5960, with a back-to-back 25 bps RBNZ hike to 2.75% described as virtually fully priced before the Sept. 2 policy decision.
The New Zealand dollar edged higher against the US dollar, with NZD/USD quoted around 0.5960 during Asian hours on Tuesday after modest losses the prior day, as market expectations increasingly lean toward additional tightening by the Reserve Bank of New Zealand. According to FXStreet, support for the Kiwi comes from expectations that inflation remains elevated, with traders focusing on the RBNZ meeting on September 2. Strategists at Brown Brothers Harriman said a 25 bps back-to-back hike to 2.75% is virtually fully priced-in, reinforced by anticipation of a fresh Monetary Policy Statement at the upcoming decision.
FXStreet also linked NZD/USD gains to downward pressure on the US dollar, pointing to the US Treasury decision to double its buyback operations for longer-dated bonds. The outlet noted that reports suggest Treasury Secretary Scott Bessent could tap up to $1 trillion from the Treasury General Account to fund these repurchases.
Separately, FXStreet highlighted rising geopolitical tension, saying the US expanded secondary sanctions aimed at entities trading with Iran, and Bessent warned a major financial institution could face enforcement action this week. The article added that attention is also on a busy US economic calendar this week, including consumer confidence, Wednesday’s Personal Consumption Expenditures price index, and a Federal Reserve chair speech at Jackson Hole on Friday.