US PCE inflation figures reinforce Fed rate hike expectations, lifting the USD and pressuring the New Zealand Dollar.
The New Zealand Dollar fell below 0.5950 against the US Dollar on Monday, extending losses for a second day. Stronger US inflation data, released last Wednesday, has increased pressure on the Federal Reserve to raise interest rates in the near term, bolstering the USD.
The US Personal Consumption Expenditures Price Index showed inflation remains well above the Fed’s 2% target. Despite this, market expectations for a September rate hike remain largely unchanged, according to the CME’s FedWatch Tool. Analysts at ING suggest the Fed may hold rates in September but warn that upcoming data and Fed communication will be critical.
Technical analysis indicates NZD/USD remains supported above an ascending trendline near 0.5900 and the 200-day Simple Moving Average at 0.5844, though bears target the 0.5930 level.