NZD Surges on Expectations of Another RBNZ Rate Hike
The New Zealand Dollar (NZD) has continued its upward trend against the US Dollar (USD), reaching levels around 0.5950 during European hours on Thursday. This appreciation is largely due to expectations of another interest rate hike from the Reserve Bank of New Zealand (RBNZ) in September.
Strategists at BNY Mellon have questioned the current pricing for further RBNZ hikes, suggesting that inflation expectations remain relatively well-anchored, which may temper the case for additional tightening. They note that domestic activity remains robust but are unconvinced by market assumptions of two more RBNZ hikes by year-end.
The NZD/USD pair has held its ground despite potential challenges to the US Dollar (USD) due to the US Treasury Department's decision to stabilize domestic bond markets through increased buyback operations. This move aims to cap long-term borrowing costs and enhance overall global USD liquidity, which could exert downside pressure on the currency.
However, the Greenback may still receive safe-haven support from geopolitical friction in the Strait of Hormuz, where tensions between the US and Iran have intensified.