Australia, NZ dollars edge up as Fed faces scepticism

Andrew Boak, head of Australian economics at Goldman Sachs, said the miss on inflation meant he no longer expected one final rate rise next month.

"The material downside surprise relative to expectations shifts the balance of risks towards the RBA remaining on hold at 4.35% in August and for the remainder of 2026," he wrote in a note.

"On balance, we continue to expect the RBA to "normalise" policy settings via a gradual easing cycle in 2027, with three 25bp reductions to 3.60%, commencing in February."

Markets are not nearly as dovish, pricing no easing at all over next year.

For the Reserve Bank of New Zealand, markets imply a 90% chance it will hike the 2.5% cash rate in September, encouraged in part by an upbeat report on businesses confidence out on Thursday.

The ANZ survey found a net 56.1% of respondents expected the economy to improve over the year ahead, up from 36.6% in June.