Kiwi Tumbles as Hot US Inflation Data Crushes Rate Cut Bets

The New Zealand dollar fell to around 0.5950 against the US dollar on Friday after a hotter-than-expected US inflation reading forced traders to unwind bets on imminent Federal Reserve rate cuts.

The core Personal Consumption Expenditures price index, the Fed's preferred inflation gauge, rose 0.4% month-over-month in January, surpassing the 0.3% consensus estimate.

This data signaled that inflationary pressures remain stubbornly persistent, complicating the central bank's path toward policy easing.

The dollar index climbed as market participants repriced the trajectory of monetary policy, with market-implied probabilities for a rate cut at the March meeting falling to near zero.