- NZD/USD declines due to hawkish sentiment around the Fed.
- The CME’s FedWatch tool suggests the odds of a Fed rate cut in September have dropped to almost 49.0%.
- The New Zealand Dollar could limit its decline as the RBNZ is expected to maintain the tightening policy for longer.
He NZD/USD drops to around 0.6120 during the European trading session on Tuesday. The US Dollar (USD) gains ground against the New Zealand Dollar as investors take a cautious stance ahead of the Fed’s interest rate decision scheduled for Wednesday.
The Federal Reserve is anticipated to keep interest rates in the 5.25%-5.50% range as it seeks to curb inflation toward its 2% target. According to the CME’s FedWatch tool, the probability of a Fed rate cut in September of at least 25 basis points has decreased to almost 49.0%, down from 59.5% the previous week.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, maintains its position due to the emergence of hawkish sentiment around the Fed regarding its tightening policy. Strong US jobs data for May has reduced the likelihood of two Fed rate cuts in 2024.
On the New Zealand Dollar front, traders are likely to be awaiting China’s CPI and PPI reports on Wednesday for insight into economic conditions in New Zealand’s largest export market.
High interest rates in New Zealand have continued to provide sustained support to the New Zealand Dollar (NZD) despite a weakening economy. The Reserve Bank of New Zealand (RBNZ) is expected to maintain stable policy until at least mid-2025 to allow for a thorough evaluation of the data.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
