Kiwi Rebounds Amid Expectations of Imminent Rate Hike
The New Zealand dollar made a comeback on Friday after experiencing an overnight dip. Market expectations for an imminent interest rate hike remained strong, driving the kiwi up by 0.2% to $0.5865.
Investors continue to bet heavily on a September rate increase, with around 85% pricing in a 2.5% cash rate hike. This is partly due to the Reserve Bank of New Zealand's repeated warnings about making policy less stimulative.
Data released showed that New Zealand's manufacturing activity expanded for another month in July, and the RBNZ maintained its loan-to-value ratio settings despite persistent weakness in the housing market.
Across the Tasman Sea, the Australian dollar remained steady at $0.7061 after a hawkish central bank week. The Reserve Bank of Australia held interest rates steady at 4.35% for a second time this week, with Governor Michele Bullock hinting that rates might need to rise again due to poor productivity growth and external risks.