The New Zealand dollar climbed sharply on Tuesday after a surprisingly strong inflation reading reinforced market expectations that the Reserve Bank of New Zealand will maintain its restrictive policy stance for longer than previously priced in.
The kiwi’s advance was driven by growing conviction that domestic price pressures remain sticky, reducing the likelihood of near-term easing.
3% overnight gain. Both currencies have been supported by a broader wave of optimism triggered by softer-than-expected US inflation data, which has reduced pressure on the Federal Reserve to keep rates elevated.
The Australian dollar followed suit, nudging up 0.1% to $0.7005, building on a nearly 0.3% overnight gain.
Both currencies have been supported by a broader wave of optimism triggered by softer-than-expected US inflation data, which has reduced pressure on the Federal Reserve to keep rates elevated.
The kiwi’s recent performance reflects a shift in market sentiment toward the Reserve Bank of New Zealand.
After climbing 0.4% on Friday to reach $0.5778 — a three-week high against the US dollar — the currency has continued its upward trajectory.