Softer US inflation data reduces Fed rate hike bets, lifting the New Zealand Dollar amid RBNZ tightening expectations.
NZD/USD climbed 0.14% to 0.5850 on Monday as the US Dollar weakened after US inflation data eased expectations of further Federal Reserve rate hikes. The shift in Fed policy outlook supported higher-yielding currencies like the New Zealand Dollar.
Recent US Consumer Price Index and Producer Price Index figures showed slower inflation, reinforcing market bets that the Fed will hold rates steady at its next meeting. Meanwhile, the Reserve Bank of New Zealand raised its Official Cash Rate earlier this month and signaled potential further tightening, widening the policy divergence.
Geopolitical tensions in the Middle East capped gains for risk-sensitive assets, though the Kiwi remained supported by domestic economic optimism and elevated inflation pressures.