NZD/USD Hovers Near Weekly Low Below 0.5950 as Fed Rate Hike Bets Boost Dollar

The New Zealand dollar extended its weakness against the US dollar on Thursday, with the pair slipping below the mid-0.5900s during early European trading, approaching the weekly low set in the previous session. The greenback found buying support amid renewed expectations of Federal Reserve rate hikes, serving as the primary factor weighing on the kiwi.

**US Inflation Data Reinforces Tightening Expectations**

Recent US inflation indicators show price pressures remain stubborn. According to market reports, the core PCE price index rose 3.7% year-on-year in July, above the market expectation of 3.6%, with month-on-month growth also exceeding forecasts. This data strengthened market bets that the Fed may continue tightening monetary policy, driving a rebound in dollar demand. Analysts at Westpac noted that resilient economic data has prompted markets to reassess the interest rate outlook, providing a boost to the dollar.

**Kiwi Under Pressure but Technical Support Below**

NZD/USD found temporary respite near 0.5950, but the overall trend remains tilted to the downside. Market participants are closely watching the upcoming Jackson Hole global central bank symposium for clues on the Fed's next policy path. Ahead of that, the pair may maintain a range-bound pattern, but with the dollar's strength, the kiwi's rebound potential is likely to be limited.

**Short-Term Focus on Central Bank Policy Signals**

Several major central banks will announce interest rate decisions this week, with market focus shifting from the rate decisions themselves to the tone of post-meeting statements. While markets broadly expect the Fed to hold rates steady, any hawkish signals could further lift the dollar, intensifying downward pressure on the kiwi. Traders should be wary of volatility risks from subtle changes in policy language.