New Zealand Dollar struggles due to cautious RBNZ policy outlook
NZD/USD depreciates after two days of gains, trading around 0.5880 during European hours on Monday. The pair depreciates as the New Zealand Dollar (NZD) faces pressure from cautious sentiment surrounding the Reserve Bank of New Zealand’s (RBNZ) policy outlook.
New Zealand's currency, the NZD, is experiencing a downturn due to cautious expectations from the Reserve Bank of New Zealand (RBNZ). The value of the NZD/USD pair fell to around 0.5880 during European trading hours on Monday, despite the bank's decision to raise the official cash rate for a second consecutive meeting. RBNZ's cautious outlook may continue to weigh on the currency, but the US Dollar's weakening could limit downside risks for the NZD/USD pair.
Factors contributing to the US Dollar's decline include expectations of a benign Consumer Price Index reading, which could prevent the Federal Reserve from raising interest rates despite strong August labor market data. Deutsche Bank's US economists anticipate a notable increase in price pressures in the upcoming CPI report, while Goldman Sachs expects a potential rate hike to be delayed until after crucial US inflation data.
Fed officials' more hawkish tone and the FXS Sentiment Index's rise above neutral further bolster the Dollar's position.
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