NZD/USD Held Near 0.5610 Amid Ongoing External Pressures
NZD/USD held near 0.5610 in Asian trade on Monday, extending a second day of softness as the New Zealand Dollar stayed under pressure. Markets tracked the widening Middle East conflict and firmer oil prices, which have kept inflation worries in focus. Attention also turned to near-term data risk, with New Zealand food inflation and a business PMI due later in the week, while traders awaited US inflation figures ahead of the Federal Reserve’s next policy decision. China’s September CPI and PPI releases were also in view, against weak domestic demand and high energy costs.
US Dollar Weakness and Fed Policy Expectations
Any downside in the pair was tempered by a softer US Dollar after the University of Michigan Consumer Sentiment Index fell to 46.3 in October from 48.1 in September, undershooting a 47.6 forecast. CME FedWatch showed a 17.7% chance of a Fed hike of at least 25 basis points this month, down from 24.4% a week earlier, while markets priced an 84.1% probability of a December increase. Fed rhetoric stayed firm: Musalem’s FXS Speechtracker score ticked up to 7.3/10 from a 7.2/10 average, even as the FXS Fed Sentiment Index slipped 0.25 points to 138.33.
