- NZD/USD holds firm near 0.5945 in Thursday’s Asian session.
- Cooler US producer inflation boosts Fed rate cut bets, weighing on the US Dollar.
- RBNZ’s Hawkesby reiterates OCR seen at 2.5% by year-end.
The NZD/USD pair gains traction around 0.5945 during the Asian trading hours on Thursday. The New Zealand Dollar (NZD) edges higher against the Greenback on rising expectations that the US Federal Reserve (Fed) will deliver three rate cuts before the year’s end. Later on Thursday, the US Consumer Price Index (CPI) for August will be in the spotlight.
An unexpected drop in US producer prices bolstered expectations that the US central bank will cut interest rates next week and will deliver three reductions this year. This could exert some selling pressure on the Greenback in the near term.
“The market has positioned for the Fed to ease in September and potentially ease three times this year,” said Rodrigo Catril, currency strategist at National Australia Bank in Sydney. Meanwhile, Barclays analysts forecast three consecutive rate cuts by the Fed to conclude the year. They expect 25 basis points (bps) cuts in September, October, and December.
On the Kiwi front, the Reserve Bank of New Zealand (RBNZ) Governor Christian Hawkesby on Thursday reiterated the Official Cash Rate (OCR) projected to reach 2.5% by the end of the year. Hawkesby further stated that the pace of rate reductions will depend on incoming data and the speed of the country’s economic recovery.
The RBNZ resumed rate cuts at its August meeting after pausing in July as the sputtering recovery eased concerns about an uptick in price pressures. Policymakers will continue to watch the second-round impacts of US tariff policies on both global growth and New Zealand businesses. Any signs of weakness in the New Zealand economy could drag the Kiwi lower against the USD.
