New Zealand’s business confidence jumps to 56.1 in July, fueling NZD strength amid expectations of a 25 basis point RBNZ rate hike in September.
The New Zealand Dollar (NZD) climbed to 0.5810 against the USD, extending a three-day rally as domestic business confidence surged. The ANZ Business Outlook Index rose to 56.1 in July, up from 36.6 in June, marking its highest level since February. Easing oil prices and subsiding Middle East tensions drove the improvement.
Markets are pricing in a 25 basis point interest rate increase by the Reserve Bank of New Zealand (RBNZ) in September, following stronger-than-expected inflation data. Futures indicate rates could reach 3.0% by year-end, with a peak of 3.5% projected for mid-2027.
However, geopolitical risks persist, with TD Securities warning of disruptions in key energy shipping routes. Strains in the Strait of Hormuz and Bab el-Mandeb may limit further NZD gains as the USD strengthens on hawkish Fed expectations.