Kiwi Bounces Back as Rate Hike Expectations Hold Firm

The New Zealand dollar rebounded on Friday after experiencing an overnight decline, as market expectations for a September rate hike remained firm.

Data showed that one-year inflation expectations took a sharp drop, but this did not impact investor confidence in a potential interest rate increase.

The Reserve Bank of New Zealand has repeatedly signaled the need to reduce policy stimulus, and investors are still heavily wagering on a 2.5% cash rate hike in September, with around 85% pricing in the move.

The kiwi edged up 0.2% to $0.5865 on Friday, having dipped 0.1% overnight to as low as $0.5822.