NZD/USD remains flat after trading sideways during the early hours, hovering around 0.5640 during European trading on Tuesday.
The pair remains subdued as the New Zealand Dollar (NZD) faces challenges following the release of the Reserve Bank of New Zealand (RBNZ) Inflation Expectations. The expectations held steady at 2.28% quarter-over-quarter (QoQ) for the fourth quarter, staying within the RBNZ’s 1%-3% target range.
However, the NZD struggles as the survey also revealed that most respondents expect the RBNZ to cut interest rates later this month. Markets widely anticipate a 25-basis-point rate cut to 2.25%, with a slim 10% chance of a deeper 50-basis-point cut. This outlook is driven by rising job losses and signs that the New Zealand economy is edging toward a second recession.
Further pressure on the NZD/USD pair comes from a strengthening US Dollar (USD), fueled by optimism surrounding the near resolution of the US government shutdown. The US Senate passed a funding bill with a 60-40 vote, effectively ending the 41-day shutdown. Notably, eight Democrats joined Republicans to advance the measure, which now moves to the House for approval.
On Monday, US President Donald Trump expressed support for a bipartisan deal to end the shutdown, signaling a likely reopening within days. Senate Majority Leader John Thune has said he expects Trump to sign the bill once Congress passes it.
Despite the US Dollar’s gains, it pared some daily increases, possibly due to growing economic uncertainty in the US. This uncertainty has fueled expectations of a near-term Federal Reserve rate cut. According to the CME FedWatch Tool, markets are currently pricing in a 62% chance of a 25-basis-point rate cut in December.
https://bitcoinethereumnews.com/finance/nzd-usd-hovers-around-0-5640-downside-likely-on-rbnz-rate-cut-bets/