Summary:
The New Zealand dollar firmed Thursday as traders worried about the Fed's independence after Trump's latest attack on Powell, who will speak at Jackson Hole.
The New Zealand dollar firmed on Thursday as traders fretted about the Fed's independence after yet another attack from Trump on Chair Powell who will speak at the Jackson Hole Symposium later this week.
Trump called on Fed Governor Lisa Cook to resign on the basis of allegations made by one of his political allies about mortgages she holds in Michigan and Georgia, intensifying his effort to drive lower rates.
The RBNZ cut its policy rate by 25 bps to a three-year low on Wednesday, and flagged further reductions in coming months as policymakers warned of domestic and global headwinds to growth.
Annual inflation remains within the 1%-3% target band in Q2, giving the central bank leeway to cut rates further. It forecasts inflation to rise to 3% in Q3, and then ease to around 2% by the middle of next year.
ANZ bank is now expecting two more cuts by the end of the year, saying the RBNZ was "much more dovish than expected." That view dovetails with Bank of New Zealand's latest research.
The Antipodean nation slipped into recession last year, and the recovery has been hampered by tariff risks, slowing global growth and the government's tight fiscal policy.
The Kiwi has fallen to the lowest level in more than 4 months. A break below 200 SMA points to more pains ahead, with the next support lying around 0.5800.
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