FX.co ★ Kiwi Dollar Falls on Soft CPI Data

The New Zealand dollar declined to approximately $0.594 on Monday, reversing the gains observed in the previous session and settling near a four-week low. This movement occurred as investors responded to weaker-than-anticipated inflation figures. In the second quarter, the Consumer Price Index (CPI) rose by 0.5%, down from the 0.9% increase in the first quarter, and below the projected 0.6%. On an annual scale, inflation rose to 2.7% from 2.5%, failing to meet the 2.8% prediction. Although inflation is approaching the upper threshold of the Reserve Bank of New Zealand’s 1–3% target range, the combination of subdued medium-term pressures and excess economic capacity has maintained the likelihood of a rate cut in August. Ongoing trade tensions are further exacerbating the Kiwi's decline, thereby threatening New Zealand's economy, which relies heavily on exports. US Commerce Secretary Howard Lutnick confirmed that August 1 remains the definitive deadline for nations to commence paying reciprocal tariffs, although negotiations may still proceed. He also highlighted that smaller countries might face an initial tariff of 10%, in alignment with President Trump’s recent communications to trade partners detailing these new tariff rates.