FX.co ★ New Zealand Dollar Stabilizes

The New Zealand dollar steadied around $0.580 after sliding 0.7% overnight to its weakest level since late July, as the US dollar strengthened on mounting expectations of a Federal Reserve rate hike next week. Sentiment toward the kiwi was further dampened by a more dovish shift in the Reserve Bank of New Zealand’s policy outlook, with recent remarks from officials underscoring the central bank’s preference for a gradual tightening path.

Markets now broadly anticipate that the RBNZ will keep interest rates on hold in October, though a rate increase in December remains almost fully priced in. On the data front, growth in New Zealand’s manufacturing sector slowed in August, with firms citing cost-of-living pressures and the conflict in the Middle East as key drags on activity. The New Zealand dollar is down more than 1% so far this week and is on track for its third straight weekly decline.