US inflation figures boost Fed rate hike odds, lifting the USD and weighing on the New Zealand Dollar ahead of Jackson Hole.
The New Zealand Dollar fell to near 0.5950 against the US Dollar in early Asian trading Thursday. The move followed stronger-than-expected US inflation data, which reinforced expectations for a Federal Reserve rate increase by year-end.
The Personal Consumption Expenditures Price Index rose 3.7% year-over-year in July, matching June’s print but exceeding forecasts of 3.6%. Core PCE, the Fed’s preferred gauge, held steady at 3.3%, in line with estimates. Markets now price a 38% chance of a 25bps Fed hike in September, up from 36% before the release.
Traders are focused on Fed Chair remarks at Friday’s Jackson Hole Symposium for further clues on US monetary policy. The Reserve Bank of New Zealand’s next move, a hike to 2.75%, is already largely priced in for September.