Kiwi Edges Higher as Traders Weigh Fed and RBNZ Signals
The New Zealand Dollar (NZD) gained against the US Dollar (USD) on Friday as market participants positioned ahead of the upcoming US employment report. The Kiwi traded near 0.5895 in the Asian session, boosted by a softer Greenback following comments from Federal Reserve Governor Christopher Waller.
Waller signaled his preference to keep interest rates unchanged at the September meeting if inflation data cooperate, leading to a decline in market-implied odds of a 25 bps rate hike to 50.2% from 63.2%. The shift in expectations supported NZD/USD as the rate differential outlook became less favorable for the US currency.
On the other hand, the Reserve Bank of New Zealand (RBNZ) delivered a dovish hike by raising the Official Cash Rate to 2.75% on Wednesday. While officials indicated a likely wait until December before further tightening, they also stressed that future rate decisions would be data-dependent.