Cooling US inflation data reduces expectations for a near-term Fed rate increase, weakening the USD and lifting the New Zealand dollar.
The NZD/USD pair recovered from a two-week low of 0.5820, climbing above 0.5850 during Friday’s Asian session. The move snapped a four-day losing streak as traders scaled back bets on an immediate US Federal Reserve rate hike following softer-than-expected US CPI and PPI data.
Prior to the rebound, the pair had fallen for four consecutive sessions, pressured by a stronger USD. However, cooling inflation signals in the US eased concerns over aggressive monetary tightening, weighing on the greenback. Geopolitical tensions, including US-Iran standoffs and Red Sea attacks, provided some support to the USD as a safe-haven asset.
Market focus remains on Fed policy expectations and geopolitical developments, with traders balancing inflation data against rising global risks.