NZD Falls After RBNZ's Dovish Rate Hike Ahead of US Fed Decision
The New Zealand Dollar (NZD/USD) has fallen to around 0.5790 against the US Dollar in early Asian trading on Monday, as investors react to the Reserve Bank of New Zealand's (RBNZ) recent rate hike.
The RBNZ increased its Official Cash Rate by 25 basis points to 2.75%, but policymakers emphasized that the current level of rates is still accommodative and highlighted a focus on a 'gradual removal of monetary stimulus.'
This dovish tone has cooled expectations for a more forceful tightening path, leading to selling in the New Zealand Dollar.
The upcoming US Federal Reserve (Fed) policy announcement on Wednesday will be closely watched, with market positioning shifting after stronger-than-expected US inflation data. The CME FedWatch tool indicates that traders now assign nearly an 86.2% probability to a 25 bps rate increase.