Cooling US inflation and soft retail sales weigh on the USD, while RBNZ rate hike expectations lift the New Zealand Dollar to its highest since June.
The NZD/USD pair rose above 0.5900 for the first time since June 3, extending gains for a second session. Weak US inflation data, including a 0.6% drop in July retail sales, reduced expectations for a near-term Fed rate hike, pressuring the USD.
US Consumer Price Index and Producer Price Index figures signaled cooling inflation, while New Zealand’s currency benefited from the Reserve Bank of New Zealand’s hawkish stance. The RBNZ has indicated potential further rate hikes, citing above-target inflation and a favorable growth outlook.
Analysts note the RBNZ’s policy rate remains near the lower end of its neutral range (2.20%-4.10%), supporting additional tightening. However, geopolitical risks and volatile oil prices may limit USD losses and cap further NZD gains.