Weaker USD on softer US PCE data fails to lift NZD as RBNZ rate hold expectations limit gains.
NZD/USD trades at 0.5650, up 0.05%, as the New Zealand Dollar struggles despite a softer US Dollar following May’s US PCE inflation data. The annual PCE Price Index rose 4.1%, matching forecasts, while the monthly gain of 0.4% fell short of the 0.5% consensus.
Investors reduced bets on a July Fed rate hike after the release, with the CME FedWatch tool showing a 29.9% chance, down from 38.5% a week earlier. However, the RBNZ’s expected pause in July continues to cap NZD upside, with ASB Bank now forecasting no hike until September.
Markets still see a September Fed hike as possible, creating a policy divergence that may pressure the Kiwi further.