NZD/USD Drops 0.89% as USD Gains Pre-CPI; Kiwi Leads Losses

The US dollar opened the North American session with broad-based strength ahead of the critical June CPI release and Fed Governor Warsh's testimony. NZD/USD suffered the largest decline among major pairs, falling 0.89% to 0.5799, making the New Zealand dollar the worst-performing G10 currency. AUD/USD was the next weakest, declining 0.35%, followed by losses in USD/CAD, USD/CHF, GBP/USD, USD/JPY, and EUR/USD. The New Zealand dollar's underperformance is attributed to a reversal following last week's hawkish shift from the Reserve Bank of New Zealand, which had temporarily lifted the kiwi. Pre-CPI positioning saw traders favoring the greenback as markets braced for a potentially market-moving inflation report. The broad dollar bid reflected cautious sentiment, with traders unwilling to take directional bets against the USD ahead of key data. However, this pre-CPI dollar strength was subsequently reversed following the softer-than-expected inflation print, which triggered a sharp dollar selloff across all major pairs.