NZD/USD retreats on Tuesday and trades around 0.5880 at the time of writing, down 0.38% on the day.
The New Zealand Dollar (NZD) remains under pressure as mounting geopolitical tensions between the United States (US) and Iran fuel risk aversion and support demand for the US Dollar (USD)
US President Donald Trump says he is not interested in renewing the expiring agreement with Iran. He notably points to the naval blockade of Iranian ports as a means of leverage and reiterates his intention to place the strategic waterway under US control. These comments heighten concerns about a further escalation in tensions between Washington and Tehran.
The deterioration in market sentiment weighs on the New Zealand Dollar, which is generally sensitive to changes in risk appetite, while the Greenback benefits from safe-haven flows. However, the US Dollar’s advance could remain limited by fading expectations of monetary tightening from the Federal Reserve (Fed). The unexpected weakness in July US Nonfarm Payrolls (NFP) and moderate consumer inflation figures weaken the case for an imminent interest rate hike.