Market expectations of a Reserve Bank of New Zealand rate increase in September drive the NZD/USD pair higher amid mixed USD pressure.
The New Zealand Dollar rose to 0.5950 against the USD on Thursday, extending a two-day rally as traders priced in a potential Reserve Bank of New Zealand rate hike in September. The RBNZ’s hawkish outlook contrasts with skepticism from BNY strategists, who question market assumptions of two additional rate increases by year-end.
NZD/USD trades above its 12-month average, supported by robust domestic activity, though inflation expectations remain anchored. Meanwhile, the USD faces headwinds from the US Treasury’s plans to double buyback operations for long-dated bonds, aiming to stabilize yields and liquidity.
The Treasury’s intervention may cap long-term borrowing costs but could weigh on the USD, though safe-haven demand may provide some support.