Kiwi starts recovering on inflation outlook

Economies.com
2023-08-09 06:34AM UTC

New Zealand dollar rose in European trade against a basket of major rivals, starting to recover from two-month lows against US dollar on inflation forecasts in New Zealand, which rose for the third quarter of the year, boosting chances of another interest rate hike.

 

US dollar declined a day before major US inflation data for July, which could showcase slower consumer prices and reduced pressures on Fed policy makers. 

 

NZD/USD rose 0.4% to 0.6089, with a session-low at 0.6048, after losing 0.7% on Tuesday, marking a two-month low at 60.35, on concerns about China's economy, the most important trade partner of New Zealand.

 

Inflation Forecasts

 

Earlier data, data showed that business managers in New Zealand expect inflation to be up to 2.83% in the third quarter of the year from 2.79% in the second quarter.

 

The outlook of higher prices could nudge the Reserve Bank of New Zealand to raise interest rates once more to control inflation.

 

The RBNZ will convene again on August 16th to discuss economic developments and appropriate policies. 

 

US Dollar

 

The dollar index fell 0.2% today, on track for the first loss in three sessions against a basket of major rivals.

 

Such a decline comes ahead of major US inflation data, crucial for gauging the likely path ahead for monetary policies. 

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