US Dollar Holds Steady, NZD Soars Amid Faster Rate Hike Expectations
Aiswarya Gopan • 1 min read
The US dollar is holding steady into Tuesday as investors await more details on the Fed’s recent hawkish shift with the release of the latest FOMC meeting’s minutes scheduled for later this week. At the time of writing, the US dollar index DXY is trading around 92.35.
The hesitation among traders to enter new positions in the greenback has helped boost commodity currencies, with AUD/USD returning above the key $0.75 level. Moves in the AUD remain somewhat limited, however, after the RBA kept its monetary policy steady and even hinted at expanding its bond purchase program.
Meanwhile, NZD/USD rose sharply in the Asian session to trade at the highest levels seen in a week after business confidence soared across New Zealand and raised expectations for a faster rate hike by the RBNZ. The latest swaps pricing indicates a 75% chance that the NZ central bank could announce a rate hike by as soon as this November.
Later today, the US dollar could experience some volatility on the release of the ISM non-manufacturing PMI figures. The data will offer further clarity on the progress of economic recovery within the US.
Expectations are for the headline PMI reading to dip to 63.5 for the month of June. However, investors are likely to closely monitor the sub-index measuring the inflation component – prices paid, to gauge for clues on the effect of rising prices.