The New Zealand dollar falls to mid-0.5800s amid USD demand driven by Fed policy expectations and geopolitical tensions.
The NZD/USD pair dropped to a fresh weekly low near mid-0.5800s during Wednesday’s Asian session, extending its retracement from the 0.5925 level reached earlier this month. A firmer US dollar, supported by expectations around the upcoming FOMC minutes, weighed on the pair.
Investors are seeking clues on the Federal Reserve’s future policy path, which could shape near-term USD dynamics. Elevated US Treasury yields, fueled by inflation concerns from rising oil prices and Middle East tensions, further bolstered the greenback. Geopolitical risks, including a US-Iran standoff over the Strait of Hormuz, added to the dollar’s safe-haven appeal.
Crude oil prices climbed to a nearly three-week high, reviving inflation fears and reinforcing bets for at least one more Fed rate hike. The combination of policy uncertainty and geopolitical risks kept markets cautious.