U.S. dollar struggles to hold gains as New Zealand dollar rises on positive business outlook

(MENAFN) On Thursday, the US dollar faced challenges in sustaining its recovery as investors awaited crucial inflation data from the United States, specifically the core personal consumption expenditures (PCE) price index, which is the Federal Reserve’s preferred inflation measure. The anticipation of this key report, due to be released on Friday, kept currency movements relatively constrained throughout the week, with the dollar's performance remaining largely rangebound. This data is expected to provide significant insights into future Federal Reserve policy decisions and impact market dynamics.

In contrast, the New Zealand dollar experienced notable strength, reaching an eight-month high of USD0.6295 during the Asian trading session. This robust performance came in the wake of a positive survey indicating a surge in business confidence in New Zealand. The survey, which showed business confidence reaching its highest level in a decade for August, provided a strong boost to the New Zealand dollar. It was last reported up 0.73 percent at USD0.6291. Michael Gordon, an economist at Westpac in New Zealand, highlighted that this increase in business confidence followed the Reserve Bank of New Zealand’s recent shift in monetary policy.

Earlier in the month, the Reserve Bank of New Zealand announced its first interest rate cut in over four years and hinted at the possibility of further cuts. This monetary policy adjustment has contributed to the strengthening of the New Zealand dollar. Meanwhile, in the broader market, the US dollar struggled to maintain its gains after a 0.48 percent rise in the previous session, partly due to end-of-month demand fluctuations. The upcoming PCE data will likely play a crucial role in determining the dollar's future trajectory and overall market sentiment. 

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