Kiwi Strengthens Against USD as RBNZ Hike Expectations Rise
The New Zealand dollar (NZD) strengthened against the US dollar (USD) on Friday, reaching around 0.5960 during early European trading hours.
This move was driven by a hawkish tone from the Reserve Bank of New Zealand (RBNZ), with a Reuters poll showing that 90% of economists expect a 25-basis-point rate hike to 2.75% at its upcoming September policy meeting.
The RBNZ raised interest rates for the first time in over three years last month, signaling further tightening ahead to return inflation to its 1-3% target range.
TD Securities noted that the July rate hike marked a clear inflection point for positioning in the Kiwi, with subsequent data releases not providing enough evidence for market pricing to deviate from the RBNZ's latest OCR guidance.