FX.co ★ New Zealand Dollar Lingers Near 1-Week Lows

The New Zealand dollar held around $0.591 on Monday after sliding 0.6% to a more than one-week low on Friday, as the US dollar strengthened on the back of hawkish remarks from Federal Reserve Chair Kevin Warsh. In his first major speech since becoming Fed chair in May, Warsh signaled that additional interest rate increases may be needed to contain inflation, prompting traders to raise the probability of a September rate hike. This shift in US rate expectations outweighed support for the kiwi stemming from anticipated further policy tightening by the Reserve Bank of New Zealand. The RBNZ is widely expected to deliver another quarter-point rate hike at its meeting later this week, and most economists foresee at least one additional increase, potentially lifting the policy rate to 3% or higher by December. On the data front, New Zealand’s business confidence eased slightly in August from July’s five-month high but remained solid overall.