NZD Tumbles as Fed Rate Hike Bets Surge Amid Hot US Inflation

The New Zealand Dollar (NZD) fell on Monday as the US Dollar gained strength due to rising expectations of a Federal Reserve rate hike. The NZD/USD pair depreciated, trading around 0.5780 during European hours, after registering modest gains in the previous day.

The US Consumer Price Index accelerated in August, reinforcing expectations that the Fed will raise interest rates next week. The CME FedWatch tool suggests an almost 87% probability of a quarter-point rate hike at the Fed's September meeting, up from 59% a week ago.

New Zealand's services sector continued to expand in August, extending its run of growth to three consecutive months. However, BusinessNZ CEO Katherine Rich cautioned that the recovery remains fragile, with three sub-indices remaining below 50.