Safe-haven demand lifts the USD after Iran rules out talks with the US until 2029, pressuring the New Zealand Dollar.
The NZD/USD pair dropped to around 0.5880 in European trading on Tuesday, extending losses for a second day. The decline follows a rebound in the US Dollar, driven by heightened geopolitical tensions after Iran dismissed negotiations with the US until President Trump’s term ends on January 20, 2029.
Rising crude oil prices and elevated US Treasury yields have fueled speculation that the Federal Reserve may accelerate rate hikes. Market-implied odds of a 25-basis-point September rate increase rose to 52%, up from 44.4% the previous day. Analysts note that higher energy costs and tightening expectations are weighing on global sovereign bonds.
Investors are closely monitoring upcoming inflation data to assess the Fed’s next move amid cooling labor market conditions.