The New Zealand dollar slipped to around $0.570 on Tuesday, its weakest level since July 8, as hawkish commentary from the Federal Reserve kept the US dollar supported. Chicago Fed President Austan Goolsbee and St. Louis Fed President Alberto Musalem signaled that additional rate hikes may be needed, pointing to persistent supply shocks and inflation that remains above the Fed’s target.
The kiwi has also been under sustained pressure since the Reserve Bank of New Zealand raised its cash rate earlier this month but indicated that any further tightening would proceed gradually. Still, markets are continuing to price in another rate increase in October, with the recent jump in oil prices adding to upside risks for inflation.
At the same time, investors are watching a US-China summit scheduled for later this week for indications of progress in relations between the world’s two largest economies. A constructive outcome could bolster global risk sentiment and support the kiwi, given New Zealand’s close trade links with China.
