New Zealand Dollar Slips Near 0.5700 as US Dollar Strength Persists Amid Hawkish Fed Expectations]
The New Zealand Dollar traded lower against the US Dollar on Tuesday, with the NZD/USD pair falling for a fifth consecutive session and hovering around 0.5705 during Asian market hours. The US Dollar continued to pressured the New Zealand Dollar amid expectations of tighter monetary policy from the Federal Reserve under new Chair Kevin Warsh.
Market sentiment has turned increasingly hawkish, with traders pricing in nearly an 89% probability of a Federal Reserve rate hike in December, according to CME Group’s FedWatch tool—a significant increase from the 15.2% chance assigned just a week ago. This dramatic shift reflects growing expectations that the Fed may adopt a more aggressive stance on inflation in the coming months.
The looming release of preliminary US S&P Global Purchasing Managers Index data later in the day kept the dollar’s strength theme alive. Meanwhile, cautiously optimistic developments in US-Iran negotiations offered some support to risk-sensitive assets like the New Zealand Dollar, with Vice President JD Vance confirming “very good progress” had been made in talks with Tehran, despite ongoing tensions.
