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Kiwi weakens as USD firms ahead of US PCE data
NZD/USD traded near 0.5960 in Asian hours as markets also looked to an RBNZ decision next week for a potential 25 bps hike.
NZD/USD fell after a modest prior-day gain, trading around 0.5960 during Asian hours on Wednesday, as FXStreet reported the US dollar gained support ahead of upcoming US Personal Consumption Expenditures data, the Federal Reserve’s preferred inflation gauge.
Traders are also shifting attention to Fed Chair Kevin Warsh’s speech at the Jackson Hole symposium on Friday for guidance ahead of the September policy decision. FXStreet added that the dollar’s upside could be limited by easing safe-haven demand linked to reports that Iran and Oman discussed a temporary joint maritime corridor in the Strait of Hormuz, with talks continuing toward a permanent arrangement covering administration, information sharing, traffic management, and maritime and security services.
For New Zealand, the downside pressure on the Kiwi may be tempered by expectations of a 25 basis point rate hike from the Reserve Bank of New Zealand next week, which would be consistent with forecasts for a year-end policy rate of 3.0%. Brown Brothers Harriman’s Elias Haddad said New Zealand retail data showed a negative surprise, with total retail sales volume down -0.5% q/q versus a 0.2% consensus, while core retail activity remained firmer.
Despite that support, FXStreet noted that markets have effectively fully priced a 25 bps RBNZ hike to 2.75% on September 2 and about 75 bps of additional tightening over the following 12 months, leaving limited near-term scope for NZD/USD gains.