Rising US geopolitical tensions and strong jobless claims data bolster the USD, limiting the New Zealand Dollar’s rebound.
NZD/USD rose 0.27% to around 0.5790 on Friday, recovering from a one-and-a-half-week low, but gains remain constrained by persistent US Dollar strength. The USD continues to benefit from escalating Middle East tensions, including US military strikes on Iran and retaliatory attacks on US-linked assets, alongside disruptions in key shipping routes like the Strait of Hormuz. These developments have fueled concerns over oil supply disruptions, pushing energy prices higher and stoking inflation fears.
Thursday’s US Initial Jobless Claims data reinforced the USD’s resilience, falling to 187K, well below expectations. The strong labor market data, coupled with inflation risks, has reinforced expectations that the Federal Reserve may maintain restrictive monetary policy or even raise rates further this year. Meanwhile, the NZD found support after stronger-than-expected inflation data bolstered bets on further tightening by the Reserve Bank of New Zealand, with markets pricing in another rate hike in September.