The New Zealand Dollar weakens as the USD recovers amid US-Iran tensions before the RBNZ holds rates at 2.25%.
The NZD/USD pair fell below the mid-0.5800s in early European trading, driven by a modest rebound in the US Dollar. The decline comes ahead of the Reserve Bank of New Zealand’s (RBNZ) rate decision on Wednesday, where the Official Cash Rate is expected to remain unchanged at 2.25% for a third consecutive meeting.
Markets are pricing in a 25-basis-point hike at the RBNZ’s July 8 meeting, with a total of 125 bps of tightening anticipated over the next year. Attention will shift to the policy statement and Governor Anna Breman’s post-meeting comments, which could influence the NZD’s trajectory.
Geopolitical risks, including US-Iran tensions, have supported the safe-haven USD, pressuring the risk-sensitive NZD. Reports of US strikes in southern Iran and ongoing disputes over nuclear programs and the Strait of Hormuz have dampened optimism, contributing to the currency pair’s decline.