NZD Tumbles as US Dollar Strengthens Ahead of Fed Rate Decision
The New Zealand Dollar is experiencing losses as it approaches the lower end of its recent range. This decline can be attributed to the US Dollar's strength, which has been bolstered by rising United States yields and rate-hike expectations.
Markets are anticipating a 25 basis points hike in interest rates from the Federal Reserve on Wednesday, with a target of 3.75%-4.00%. This increase in rates is contributing to a risk-off tone that is weighing heavily on growth-sensitive currencies like the New Zealand Dollar.
The 10-year US Treasury yield has reached its highest level since 2007, surpassing 5%, as oil prices surge and inflation worries intensify. Meanwhile, New Zealand's Q2 Gross Domestic Product data will be released later this week, with expectations of a significant slowdown to 0.1% from 0.8%