NZD Holds Steady Ahead of RBNZ Decision Amid Hawkish US Fed
The New Zealand Dollar (NZD) held steady on Monday, trading around 0.5910 against the US Dollar (USD), as investors awaited the Reserve Bank of New Zealand's (RBNZ) decision on Wednesday.
The NZD received some support from Chinese data, which showed a slight improvement in manufacturing activity, with the Manufacturing Purchasing Managers Index (PMI) rising to 49.8 in August from 49.2 in July. However, this improvement was limited, as the indicator remains below the 50 threshold separating expansion from contraction.
The RBNZ decision on Wednesday is expected to be a key driver of market movement, with many anticipating a rate hike of 25 basis points. The NZIER Monetary Policy Shadow Board has suggested that the central bank should raise its Official Cash Rate (OCR) in September.
In contrast, the US Dollar (USD) has benefited from the hawkish tone adopted by Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium, with markets now seeing a 62% chance of a rate hike in September. This repricing of the US monetary policy outlook provides support to the Greenback and helps keep NZD/USD around 0.5910.