Geopolitical tensions in the Strait of Hormuz lift the USD, pressuring the NZD ahead of RBNZ’s expected rate decision.
The New Zealand Dollar extended losses against the US Dollar, trading near 0.5700 in Asian hours Tuesday. Renewed tensions in the Strait of Hormuz, where Iran reportedly fired missiles at commercial vessels, bolstered safe-haven demand for the USD.
Market expectations for Federal Reserve rate hikes have softened following weaker-than-expected US jobs data and easing oil prices. Despite a recent drop in crude, ING forecasts the RBNZ will raise rates by 25 basis points to 2.50% on Wednesday, though the move may be a one-off.
The NZD’s decline reflects broader USD strength amid geopolitical uncertainty, even as cooling inflation pressures reduce urgency for aggressive Fed tightening.