- NZD/USD softens to near 0.5960 in Tuesday’s Asian session.
- Softer New Zealand CPI inflation has fueled the prospect of an RBNZ interest rate cut in August.
- Concerns over the Fed independence might help limit the pair’s losses.
The NZD/USD pair edges lower to around 0.5960 during the Asian trading hours on Tuesday. The New Zealand (NZD) softens against the Greenback as fresh inflation data in New Zealand rose less than forecast in the June quarter.
Data released by Statistics New Zealand on Monday showed that New Zealand’s Consumer Price Index (CPI) climbed 2.7% YoY in the second quarter (Q2) of 2025 versus 2.5% prior. This figure came in softer than the expectation of 2.8%. On a quarterly basis, the CPI inflation eased to 0.5% in Q2 from 0.9% in Q1 and below the market consensus of 0.6%.
Signs of cooling inflation in New Zealand point to the likelihood of at least one additional rate cut from the Reserve Bank of New Zealand (RBNZ) over the remainder of the year. Following the inflation report, the markets are now pricing in nearly 85% chance that the RBNZ will reduce the cash rate by a further 25 basis points (bps) in the August meeting.
However, the renewed concerns over the US Federal Reserve (Fed) independence might cap the downside for the pair. US President Donald Trump on Sunday denied a Wall Street Journal report suggesting Treasury Secretary Scott Bessent talked him out of firing Federal Reserve Chair Jerome Powell. This action came after a White House official said that Trump is likely to fire Fed’s Powell soon.
