NZD Tumbles to Two-Month Lows Amid Rising Fed Hike Bets
The New Zealand Dollar (NZD) has fallen to two-month lows against the US Dollar (USD), hitting 0.5765 after a 2.5% drop in September so far.
The downward trend is driven by risk aversion amid the Middle East war and global bond market turmoil, as well as rising bets on US Federal Reserve rate hikes.
A strong Nonfarm Payrolls (NFP) data released earlier in September and hot inflationary figures seen on Friday have prompted futures markets to price a 92% chance of a monetary tightening move by the Fed this week, up from 60% last week, according to the CME's FedWatch Tool.
The Reserve Bank of New Zealand projects its policy rate to peak at around 3.25% in 2028, which would still leave it below the top end of its nominal neutral range estimate between 2.3% and 4.1%.