Kiwi Dollar Steady Ahead of RBNZ Decision
The New Zealand dollar remained steady at approximately $0.583 on Monday, as investors turned their attention to the Reserve Bank's upcoming policy announcement this week. The central bank is expected to reduce its official cash rate from 3% on Wednesday, with the markets fully expecting a 25-basis-point cut, while also assigning roughly a 30% probability to a more significant 50-basis-point reduction, in response to recent weak economic data. Economists interpret this as a dovish shift, indicating a higher likelihood of further easing measures in the future. Concurrently, the impact of this dovish stance on downward pressure may be mitigated by potential renewed stress on the US dollar, exacerbated by increasing concerns about the economic repercussions from the ongoing government shutdown. Recent US economic data have reinforced expectations for Federal Reserve rate cuts, with markets almost fully pricing in a quarter-point decrease this month and another in December — circumstances that may eventually exert downward pressure on the US dollar.
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