NZD Gains Ground Against USD as Hawkish Expectations Soften

The New Zealand Dollar (NZD) has been gaining ground against the US Dollar (USD) for the second consecutive day, trading around 0.5900 during Asian hours on Friday.

This appreciation comes as the USD struggles with softening hawkish expectations surrounding the Federal Reserve's (Fed) monetary policy path.

Fed Governor Christopher Waller recently signaled a preference for holding interest rates steady at the upcoming September meeting, assuming upcoming inflation figures offer no major shocks. This dovish tone contrasts sharply with the hawkish remarks delivered by Chairman Kevin Warsh a week earlier.

Market pricing shifted noticeably following Waller's comments, with the CME FedWatch tool showing the probability of a September rate hike falling to 50.4%, down from 63.2% the previous day.