The New Zealand dollar stabilized around $0.585 but remained close to a two-week low, as soft economic data raised fresh doubts about how much further the Reserve Bank of New Zealand (RBNZ) will tighten policy. The country’s manufacturing PMI slipped to 54.3 in July from 60.1 in June, with most business comments turning negative.
That followed data showing one-year inflation expectations declined to 2.6% from 3.4% in the previous quarter, while the closely watched two-year measure eased to 2.3% from 2.5%. The figures indicate that inflation expectations remain contained and suggest a lower risk that higher oil prices will spill over into broader inflation.
Even so, markets still assign a high probability to a rate hike in September, as the RBNZ has repeatedly emphasized the need to withdraw some of its policy support. The kiwi is down 0.6% so far this week and is on course to break a two-week winning streak.
