NZD Tumbles on US Inflation Data, Eyes Jackson Hole Rate Hike Clues
The New Zealand Dollar (NZD) slipped to around 0.5950 against the US Dollar during early Asian trading hours on Thursday, as the US Personal Consumption Expenditures (PCE) data boosted expectations of a Federal Reserve rate hike.
The PCE Price Index rose 3.7% in the 12 months through July, matching June's figure and slightly above the estimated 3.6%, while core PCE inflation remained steady at 3.3% year-over-year, in line with forecasts.
This data kept market expectations for a Fed rate hike by year-end alive, although Westpac economist Ryan Wells noted that Chairman Kevin Warsh's speech at Jackson Hole on Friday will be the ultimate test of these predictions.
Markets now price in nearly a 38% chance of a 25 basis points Federal Reserve rate hike in September, up from 36% before the data release.