Currency Hedger No Comments

NZD remains subdued as US Dollar gains on renewed Hormuz tensions

  • NZD/USD falls as a steady US Dollar draws support from renewed geopolitical tensions in the Strait of Hormuz.
  • Traders expect the Fed to keep rates unchanged this month and in September.
  • ING anticipates the RBNZ will implement a 25-basis-point rate hike to 2.50% this Wednesday.

NZD/USD inches lower for the second successive day, trading around 0.5700 during the Asian hours on Tuesday. The currency pair depreciates as the US Dollar (USD) holds ground, which could be attributed to the renewed geopolitical tensions in the Strait of Hormuz.

Bloomberg reported, citing a United States (US) official, that Iran fired at least two missiles at commercial vessels transiting the strategic waterway late Monday. While two ships sustained significant damage, no casualties were reported. Separately, the UK Maritime Trade Operations (UKMTO) confirmed that a southbound tanker was struck on its port side by an unknown projectile, which ignited a fire on board.

Market participants scaled back expectations for Federal Reserve rate hikes this month and in September. This shift in sentiment followed a cooling employment report that revealed fewer jobs added across April, May, and June than Wall Street had anticipated. Furthermore, a recent drop in crude oil prices, driven by an OPEC+ production boost and a US-Iran peace deal, has alleviated broader inflationary pressures, softening the urgency for an aggressive Fed policy outlook.

Despite a sharp collapse in oil prices, ING anticipates the Reserve Bank of New Zealand (RBNZ) will implement a 25-basis-point “insurance” rate hike to 2.50% on Wednesday. However, the firm cautions that the tightening could be a one-off move, offering little sustained upward momentum for the New Zealand Dollar (NZD).

Currency Hedger No Comments

New Zealand Dollar declines as NZIER splits on July decision

  • NZD/USD falls as a 1.0% drop in June’s ANZ Commodity Price Index weakened the NZD.
  • The NZD faces volatility as an evenly split NZIER shadow board creates deep uncertainty ahead of the July policy decision.
  • The US Dollar advances as markets continue to price in multiple Fed rate hikes this year.

NZD/USD depreciates after two days of gains, trading around 0.5690 during the Asian hours on Monday. The pair loses ground as the New Zealand Dollar (NZD) weakens following the ANZ World Commodity Price Index, which fell 1.0% in June as easing Middle East tensions and lower oil prices weighed.

The New Zealand Dollar faces an immediate challenge as NZIER economists look past immediate disagreements to project higher interest rates over the coming year. While the shadow board is nearly evenly split on the upcoming July policy decision, creating genuine uncertainty and potential market volatility, its medium-term outlook remains unified. Regardless of the immediate decision, members firmly agree that the Official Cash Rate (OCR) must climb to a range of 3.00% to 3.25% over the next twelve months, establishing a solid anchor for interest rate expectations.

In line with this hawkish medium-term trajectory, ANZ anticipates the Reserve Bank of New Zealand (RBNZ) will raise the OCR by 25 basis points to 2.50% next Wednesday. Despite a sharp decline in global oil prices, ANZ maintains that persistent inflation risks and a weakened domestic currency warrant immediate action. They argue that delivering a neutral-to-dovish rate hike provides the RBNZ with the most comfortable tactical footing to navigate current economic pressures without overly roiling the markets.

The NZD/USD pair depreciates as the US Dollar (USD) rises, as traders expect multiple Federal Reserve (Fed) rate hikes later this year. This comes despite easing global inflation concerns, which have been helped by oil flows normalizing through the critical Strait of Hormuz.

The CME FedWatch tool shows financial markets are pricing in a 77.3% chance of interest rate hikes by year-end. Investors are now looking ahead to Wednesday’s release of the Fed’s June policy Meeting Minutes to gain clearer insights into the future path of interest rates.

Currency Hedger No Comments

New Zealand Dollar remains firm above 0.5700 after Chinese services PMI data

  • NZD/USD strengthens to near 0.5705 in Friday’s Asian session. 
  • China’s RatingDog Services PMI eased to 54.1 in June, vs 54.4 
  • US NFP increased 57,000 in June, well below expectations of a 110,000 rise. 

The NZD/USD pair gathers strength to around 0.5705 during the Asian trading hours on Friday. The New Zealand (NZD) remains strong following the Chinese economic data. The US markets will be closed on Friday in observance of Independence Day. 

Data released by RatingDog on Friday showed that China’s Services Purchasing Managers’ Index (PMI) eased slightly to 54.1 in June from 54.4 in May. However, this figure still marked the third-steepest increase in services activity in nearly three years. Services exports grew for a second consecutive month, expanding at the fastest rate since October 2024. The China-proxy Kiwi edges higher following China’s PMI report.

On the central bank’s front, ASB Bank dropped its call for a July hike from the Reserve Bank of New Zealand (RBNZ) and expects the RBNZ to keep the Official Cash Rate (OCR) on hold at the upcoming July meeting, followed by steady 25-basis-point increases starting in September, with the OCR peaking at 3.25% by early 2027.

Signs of a cooling US labor market have prompted financial markets to dial back expectations for a near-term interest rate hike from the US Federal Reserve (Fed), weighing on the Greenback against the NZD. Nonfarm Payrolls (NFP) rose by 57,000 jobs in June, the Labor Department’s Bureau of Labor Statistics reported on Thursday. Economists had forecast payrolls advancing 110,000. 

Meanwhile, the Unemployment Rate fell to 4.2% during the same period, down from 4.3% in May. Financial markets are now pricing in nearly a 52% odds of a US rate hike by September, down from 66% before the jobs data, according to the CME FedWatch tool.

Currency Hedger No Comments

NZD remains close to one-week top vs USD; looks to US NFP for fresh impetus

  • NZD/USD attracts some dip-buyers and remains close to a one-week top, set on Tuesday.
  • Fed rate hike bets, along with geopolitical risks, should support the USD and cap the pair.
  • Traders might also refrain from placing aggressive directional bets ahead of the US NFP.

The NZD/USD pair edges higher following the previous day’s two-way price moves and trades around the 0.5685 region during the Asian session on Friday. Spot prices, however, remain below a one-week high, touched on Tuesday, as traders keenly await the US monthly employment details for a fresh impetus.

The popularly known US Nonfarm Payrolls (NFP) report is a crucial driver of the Federal Reserve’s (Fed) monetary policy and play a key role in influencing the US Dollar (USD) demand. Stronger data will reaffirm a resilient US labor market and bolster rate hike bets, while a dismal print would temper expectations for a more hawkish Fed. Nevertheless, the crucial report should help investors to evaluate the timing and likelihood of future interest rate changes, which, in turn, will determine the near-term trajectory for the buck and the NZD/USD pair.

Heading into the key data risk, traders have been pricing in around a 64% chance that the US central bank will raise borrowing costs in September and assigning a nearly 85% probability of a move by the end of this year amid sticky inflation. The bets were lifted by data, showing that consumer inflation accelerated to a three-year high in May. Moreover, several Fed officials also indicated that higher interest rates may be necessary to bring inflation back to the central bank’s 2% target. This, to a larger extent, offsets Wednesday’s unimpressive US data.

The US ADP report revealed that private-sector employment increased by 98K in June, down from the previous month’s unrevised 122K and missing consensus estimates for a reading of 113K. Adding to this, the ISM Manufacturing PMI eased to 53.3 in June from 54 in the previous month. The data, however, does little to dent the underlying USD bullish sentiment amid hawkish Fed expectations. Apart from this, geopolitical risks support the safe-haven USD and warrants caution before positioning for a further appreciating move for the NZD/USD pair.

Iran and the US concluded a round of indirect talks in Qatar with no sign that they had made headway toward lasting peace amid tensions over the critical Strait of Hormuz. Separately, Russia launched a barrage of missiles and drones on Ukraine’s capital, Kyiv, early Thursday. This keeps geopolitical risks in play, which favors the USD bulls and should cap the NZD/USD pair. However, the Reserve Bank of New Zealand’s (RBNZ) hawkish shift might hold back traders from placing aggressive bearish bets around the New Zealand Dollar (NZD).

Currency Hedger No Comments

New Zealand Dollar Languishes Near 7-Month Low

The New Zealand dollar slipped to $0.566 on the first trading day of July, hovering near its lowest level in seven months amid a firm US dollar, while investors assessed the Reserve Bank’s interest rate outlook. Markets continue to price in a rate hike from the RBNZ next week, although analysts have become more divided on whether such a move is necessary given the recent decline in oil prices. Meanwhile, latest data showed business confidence improved in June, suggesting the economy may be holding up better than earlier feared. Although local economists still expect a contraction in the second quarter, they anticipate a recovery thereafter as fuel and other costs ease. The kiwi dropped 5.2% in June, marking its largest monthly fall since December 2024, and declined 1.2% in the second quarter.

Currency Hedger No Comments

New Zealand Dollar remains depressed as USD benefits from Iran risks and hawkish Fed

  • NZD/USD edges lower as geopolitical risks and hawkish Fed bets help revive the USD demand.
  • The better-than-expected official PMIs from China fail to provide any impetus to antipodeans.
  • The lack of follow-through selling warrants caution before placing fresh bearish bets on the pair.

The NZD/USD pair attracts some sellers during the Asian session on Tuesday, though it lacks bearish conviction and remains confined in a familiar range held over the past week or so. Spot prices move little following the release of China’s official PMIs and currently trade just below mid-0.5600s, down 0.05% for the day.

An official survey published by the National Bureau of Statistics (NBS) showed that business activity in China’s manufacturing sector grew slightly above expectations in June. In fact, the official Manufacturing PMI rose from the 50.0 seen in May to 50.3, slightly above expectations of 50.1. Adding to this, the gauge for the non-manufacturing sector improved to 50.2 in June vs 50.1 in the previous month and forecast for a 49.9 print. The data, however, indicated that business activity barely remained in expansion territory on the back of sluggish domestic demand and weak consumer spending. This, in turn, fails to provide any impetus to antipodean currencies, including the New Zealand Dollar (NZD) and the NZD/USD pair.

The US Dollar (USD), on the other hand, draws some support from persistent geopolitical uncertainties and mixed signals on US-Iran talks. US President Donald Trump wrote on Truth Social that Iran had requested a meeting, and it will take place in Qatar’s capital, Doha, on Tuesday. However, Deputy Iranian Foreign Minister Kazem Gharibabadi denied that there were plans for technical talks this week. Furthermore, fresh Israeli strikes on Lebanon keep geopolitical risk premiums in play, which, along with hawkish US Federal Reserve (Fed) bets, underpins the safe-haven USD and weighs on the NZD/USD pair.

According to the CME Group’s FedWatch Tool, traders are still pricing in around 63% chance that the US central bank will raise borrowing costs in September and assigning over an 80% probability of a move by the end of this year. Adding to this, renewed US-Iran hostilities sparked inflationary fears, which, in turn, favor the USD bulls. However, the NZD/USD pair, so far, has held above its lowest level since November 2025, touched last week, warranting some caution before positioning for any further depreciating move.

Currency Hedger No Comments

New Zealand Dollar weakens as US Dollar rises on Middle East risks, firm US data

  • NZD/USD weakens as a complex Middle East situation sparks risk aversion.
  • Trump claimed Iran agreed to nuclear inspections, but Iran countered that real negotiations have not yet started.
  • Markets widely expect the RBNZ to hike its Official Cash Rate by 25 basis points to 2.5% in July.

NZD/USD continues its losing streak for the sixth consecutive day, trading around 0.5660 during the Asian hours on Wednesday. The pair weakens as the US Dollar (USD) gains ground in a highly complex geopolitical landscape.

Traders are carefully navigating conflicting signals regarding a potential United States (US)-Iran diplomatic breakthrough. While US President Donald Trump stated that Iran had “fully and completely” agreed to open its facilities to nuclear inspections, Iranian Foreign Minister Abbas Araghchi quickly tempered expectations by clarifying that substantive nuclear negotiations have not actually begun.

Additionally, Iran’s chief negotiator issued a stern warning that the strategic Strait of Hormuz will never return to its pre-war status and will remain firmly under Iranian oversight. Meanwhile, diplomatic efforts showed signs of progress elsewhere as Washington hosted a fresh round of talks between Israel and Lebanon, aimed at securing a ceasefire with Iran-backed Hezbollah.

The US Dollar also received support from strong macroeconomic indicators that reinforced the narrative of “US exceptionalism.” June’s flash estimate for the US S&P Global Composite Purchasing Managers’ Index (PMI) climbed to 52.2, comfortably beating May’s reading of 51.5 and signaling healthy business expansion.

The US manufacturing sector showed remarkable resilience, with output jumping to 55.7 from the previous month’s 55.1, easily outperforming forecasts of 54.8. Simultaneously, the Services PMI printed at 51.3, ticking up from May’s 50.7 and clearing the consensus estimate of 51.0, proving that demand in the broader service economy remains incredibly sticky.

On the other side of the ledger, the Reserve Bank of New Zealand (RBNZ) is widely expected to raise its Official Cash Rate (OCR) by 25 basis points to 2.5% in July. These hawkish RBNZ expectations are strongly backed by accelerated inflationary pressures within the domestic economy. This policy outlook gained further traction after first-quarter Consumer Price Index (CPI) data remained steady at a stubborn 3.1%, keeping the pressure on New Zealand policymakers to act.

Currency Hedger No Comments

New Zealand Dollar Hits 11-Week Low

The New Zealand dollar fell to around $0.572, the lowest in eleven weeks, weighed down by a firm US dollar. The greenback strengthens amid increased bets on a US rate hike following the Federal Reserve’s hawkish signals. Meanwhile, US–Iran talks in Switzerland have made encouraging progress, with technical-level discussions set to continue this week, easing earlier concerns after President Donald Trump again warned of strikes on Iran over its support for Hezbollah. New Zealand’s GDP data released last week suggested that economic recovery was gaining momentum. However, the figures largely reflected conditions prior to the escalation in Middle East conflict. As a result, forecasts show GDP to barely grow or even contract in the second quarter. Markets continue to price in a 25-bps hike in July given the RBNZ’s hawkish outlook, though swap pricing imply only two increases this year rather than the three previously expected.