The New Zealand Dollar weakens near multi-month lows as Fed rate hike bets rise and risk sentiment sours.
NZD/USD fell to 0.5640, marking a seventh straight day of declines and trading near its lowest level since November 2025. The drop reflects broader strength in the US Dollar, driven by hawkish Federal Reserve signals and persistent risk aversion in global markets.
The US Dollar Index (DXY) reached its highest point since May 2025 after the Fed’s latest meeting, where nine of nineteen committee members suggested a potential rate hike to combat inflation. Markets now assign a 65% probability of a September increase, up from 40% a month ago, according to CME FedWatch data.
Geopolitical tensions, including concerns over Iran’s nuclear program and the Strait of Hormuz, have further pressured risk-sensitive currencies like the NZD. However, easing crude oil prices may reduce inflationary pressures, adding uncertainty to Fed policy expectations.