New Zealand inflation data exceeds forecasts, fueling bets on a 25bps RBNZ rate hike in September.
The NZD/USD pair climbed to 0.5820, reversing a two-day decline, as the Reserve Bank of New Zealand’s hawkish outlook bolstered the currency. The move follows stronger-than-expected inflation data for Q2, with annual CPI rising to 4.1% from 3.1% in the prior quarter.
New Zealand’s quarterly inflation surged 1.5%, the highest since September 2023, while the annual rate reached its peak since December 2023. Markets now price in a 25 basis points rate increase at the RBNZ’s September meeting, supporting the Kiwi’s near-term outlook.
Geopolitical tensions in the Middle East, including US strikes in Iran, may counterbalance gains by lifting demand for the safe-haven USD. Traders await Friday’s US PMI data for further direction.