FX.co ★ New Zealand Dollar Holds Near 6-Week High

The New Zealand dollar held steady around 0.582, hovering near a six-week high, supported by mounting expectations of further interest rate hikes after a stronger-than-expected inflation report. Annual inflation in New Zealand accelerated to 4.1% in Q2 from 3.1% in Q1, surpassing both market forecasts of 4% and the RBNZ’s own projection of 3.9%. This was the highest rate since Q4 2023 and pushed inflation further above the central bank’s 1–3% target band.

The hotter-than-expected data reinforced bets that the RBNZ will deliver a 25-basis-point rate increase in September, with swap markets also pricing in additional hikes in either October or December, and another move in February next year. Last week, RBNZ Chief Economist Paul Conway noted that inflation risks to the third-quarter outlook stemming from Middle East developments have increased, adding that some further withdrawal of monetary stimulus is likely to be required.