Forex News: Amended: NZ Dollar Slides Despite Traders Anticipate RBNZ

Amended: NZ Dollar Slides Despite Traders Anticipate RBNZ Rate Hike

(RTTNews) - The New Zealand dollar weakened against other major currencies in the European session on Monday, despite traders anticipate that the Reserve Bank of New Zealand will raise interest rates due to high inflation and solid confidence indicators.

Traders anticipate that the RBNZ will raise interest rates by 25 basis points to 2.75 percent for the second time in a row, due to high inflation and a significant increase in consumer and business confidence.

The RBNZ predicted in May that the OCR will be 3.0 percent by Q1 2027 and progressively increase to 3.3 percent over the medium term. As of March 2027, markets are currently pricing around 3.25 percent.

The Official Cash Rate (OCR) track and revised macroeconomic projections will be the main sources of guidance regarding the rate of additional tightening.

European stocks were subdued amid escalating tensions between Washington and Tehran around the Strait of Hormuz.

The Iranian Army launched dozens of destructive drones at the locations of U.S. helicopters and forces stationed at the AI Minhad airbase in the United Arab Emirates in retaliation for the martyrdom of the personnel of the Islamic Revolution Guards Corps and innocent Iranian compatriots on Larak Island.

In economic news, data from the National Bureau of Statistics showed that the manufacturing sector in China continued to contract in August, albeit at a slower pace, with a Purchasing Managers Index score of 49.8. That's up from 49.2 in July, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.

The bureau also said that its non-manufacturing index came in with a score of 49.0, unchanged from the previous month.

The composite index showed a score of 49.5, up from 49.3 a month earlier.

In the European trading today, the NZ dollar fell to near 2-week lows of 0.5901 against the U.S. dollar, 94.33 against the yen and 1.9638 against the euro, from early highs of 0.5922, 94.78 and 1.9575, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.56 against the greenback, 92.00 against the yen and 1.97 against the euro.

Against the Australian dollar, the kiwi slipped to nearly a 2-month low of 1.2134 from an early high of 1.2095. The kiwi may test support near the 1.22 region.

Looking ahead, German CPI data for August, U.S. Dallas Fed manufacturing index for August and U.S. Chicago PMI for August are slated for release in the New York session.

U.K. stock markets remain closed in observance of Summer Bank holiday.

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