NZD Falls Against USD as RBNZ Decision Looms

The New Zealand Dollar (NZD) fell against the US Dollar (USD) on Tuesday, down 0.24% to trade around 0.5900. The decline came despite mixed United States economic data released earlier in the day.

The Institute for Supply Management's Manufacturing Purchasing Managers Index (PMI) dropped to 54.6 in August from 55.6 in July, below market consensus of 55.2. However, the indicator remains above the 50 threshold, indicating continued expansion in US manufacturing activity at a slower pace.

The New Zealand Dollar's outlook softens ahead of the Reserve Bank of New Zealand's (RBNZ) monetary policy decision on Wednesday. Analysts at ING expect the RBNZ to deliver a widely anticipated 25 basis point hike to 2.75%. The key question is whether the statement will include firmly hawkish guidance and updated rate/economic projections.

ING sees scope for renewed currency weakness, predicting that NZD/USD could trade back below 0.590 in the near term if the RBNZ fails to meet hawkish expectations and the USD finds support.