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New Zealand Dollar drops to fresh low since April as hawkish Fed bets support USD

  • NZD/USD remains on the defensive as the Fed’s hawkish tilt continues to underpin the USD.
  • US Vice President JD Vance cancels his trip for talks with Iran, keeping a lid on the optimism.
  • Bets for more aggressive RBNZ rate hikes could support the NZD and limit losses for the pair.

The NZD/USD pair turns lower for the third straight day following a modest Asian session uptick to the 0.5775 region and touches a fresh low since April 8 in the last hour. Spot prices currently trade just below mid-0.5700s and seem poised to register heavy weekly losses amid a bullish US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, preserves its recent strength to the highest level since May 2025 in the face of the US Federal Reserve’s (Fed) hawkish tilt. In fact, policymakers projected the fed funds rate at 3.8% by the end of this year, up from 3.4% in March, implying at least one 25-basis-point (bps) rate hike in the coming months. This, to a larger extent, overshadows the US-Iran peace deal and continues to underpin the buck, which, in turn, is seen acting as a headwind for the NZD/USD pair.

Meanwhile, CNN reported that US Vice President JD Vance canceled his trip to talks with Iran in Switzerland. This further keeps a lid on the latest optimism and turns out to be another factor supporting the Greenback. 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) and limit losses for the NZD/USD pair. In fact, the RBNZ indicated that the OCR could reach roughly 2.85% by the end of this year, implying up to three rate hikes.

Moving ahead, the liquidity and trading volumes could remain low in the face of a US bank holiday in observance of Juneteenth National Independence Day. This further makes it prudent to wait for strong follow-through selling before positioning for an extension of the recent retracement slide from the vicinity of the 0.6000 psychological mark, or the May monthly swing high.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the British Pound.

USDEURGBPJPYCADAUDNZDCHF
USD1.04%1.60%0.66%1.11%0.55%1.41%1.14%
EUR-1.04%0.52%-0.37%0.06%-0.51%0.36%0.09%
GBP-1.60%-0.52%-1.06%-0.44%-1.04%-0.17%-0.44%
JPY-0.66%0.37%1.06%0.45%-0.11%0.79%0.47%
CAD-1.11%-0.06%0.44%-0.45%-0.60%0.33%0.02%
AUD-0.55%0.51%1.04%0.11%0.60%0.88%0.60%
NZD-1.41%-0.36%0.17%-0.79%-0.33%-0.88%-0.27%
CHF-1.14%-0.09%0.44%-0.47%-0.02%-0.60%0.27%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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GBP slides to fresh low since April vs bullish USD amid UK political crisis

  • GBP/USD prolongs its downtrend for the third straight day amid a combination of negative factors.
  • The UK political turmoil undermines the GBP amid reduced bets for aggressive rate hikes by the BoE.
  • The Fed’s hawkish tilt and the Iran uncertainty boost the USD, further exerting pressure on the pair.

The GBP/USD pair attracts some follow-through selling for the third straight day and weakens further below the 1.3200 mark, hitting a fresh low since April during the Asian session on Friday. Spot prices remain on track to register heavy weekly losses, and the fundamental backdrop suggests that the path of least resistance remains to the downside.

The British Pound (GBP) continues with its relative underperformance in the wake of lingering domestic political risks, which, along with a bullish US Dollar (USD), validates the near-term negative outlook for the GBP/USD pair. Greater Manchester Mayor Andy Burnham cleared a path to attempt to oust British Prime Minister Keir Starmer after winning a parliamentary seat in northern England on Friday. In his victory speech, Burnham said the result could be a “turning point” for British politics and told his party that this was a final chance to change direction.

Meanwhile, traders have scaled back expectations for more aggressive interest rate hikes by the Bank of England (BoE) following the release of softer inflation figures earlier this week. Furthermore, the US-Iran peace deal eased concerns about the energy shock, endorsing the view that the BoE will hold interest rates steady. This is seen as another factor undermining the GBP. The USD, on the other hand, stands firm near its highest level since late March amid the US Federal Reserve’s (Fed) more hawkish tilt, signaling the possibility of at least one rate hike by the year-end.

On the geopolitical front, US Vice President JD Vance canceled his planned trip for talks with Iran in Switzerland, saying that the meeting wasn’t yet finalized. Adding to this, Israeli air strikes in Lebanon threaten to unravel the US-Iran deal. This further benefits the safe-haven USD and backs the case for an extension of the GBP/USD pair’s steep downfall from the weekly swing high, near the 1.3460 region. This, in turn, suggests that any attempted recovery could be seen as a selling opportunity as traders now look to UK monthly Retail Sales data for a fresh impetus.

Pound Sterling Price This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD1.17%1.70%0.74%1.14%0.66%1.61%1.32%
EUR-1.17%0.50%-0.42%-0.03%-0.53%0.43%0.14%
GBP-1.70%-0.50%-1.09%-0.52%-1.03%-0.07%-0.35%
JPY-0.74%0.42%1.09%0.39%-0.10%0.89%0.56%
CAD-1.14%0.03%0.52%-0.39%-0.52%0.50%0.16%
AUD-0.66%0.53%1.03%0.10%0.52%0.96%0.69%
NZD-1.61%-0.43%0.07%-0.89%-0.50%-0.96%-0.28%
CHF-1.32%-0.14%0.35%-0.56%-0.16%-0.69%0.28%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

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Aussie Heads for Weekly Loss

The Australian dollar held below $0.705, near ten-week lows and headed for a modest weekly loss as a stronger US dollar and fading bets of additional RBA rate hikes weighed on the currency. Markets increasingly suspect the Reserve Bank of Australia has finished tightening after keeping the cash rate unchanged this week, with the odds of one more hike this year reduced to about 50%. While Governor Michele Bullock maintained that further tightening remains possible if inflation persists, markets expect it would take a sharply higher second-quarter inflation reading to trigger another move. Meanwhile, the US dollar index climbed to a one-year high after the Fed Reserve’s hawkish hold prompted traders to increase bets on further rate hikes. Nearly half of policymakers projected at least one increase this year amid growing inflation concerns. Elsewhere, a US-Iran interim deal and the resumption of energy flows through the Strait of Hormuz provided some support for the risk sensitive AUD.

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Dollar Towers on Hawkish Fed Signals

The dollar index traded around 100.8 on Friday, hovering at its highest level since May 2025 as investors piled on rate hike bets this year following hawkish signals from the Federal Reserve. On Wednesday, the Fed left rates unchanged as widely expected, but roughly half of FOMC members now anticipate at least one rate increase in 2026. The central bank also raised its inflation projections to account for the economic effects of the conflict in the Middle East. Chair Kevin Warsh declined to provide guidance on the next policy move but reaffirmed the Fed’s commitment to restoring price stability. Meanwhile, the US-Iran interim peace agreement took effect on Thursday, bringing an end to a prolonged conflict that triggered a historic disruption to global energy supplies. While the deal helped ease geopolitical risks and pushed oil prices lower, markets remained focused on the Fed’s policy outlook and the prospect of tighter monetary conditions.

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Yen Weakens Despite Verbal Interventions

The Japanese yen weakened beyond 161 per dollar on Friday, falling to its lowest level since July 2024 despite renewed verbal intervention from Japanese authorities. Chief Cabinet Secretary Minoru Kihara said on Thursday that the government remains prepared to respond to excessive currency movements whenever necessary. The yen has now erased all the gains recorded on April 30, when authorities conducted a record-sized intervention to support the currency. The latest decline came despite the Bank of Japan’s gradual tightening cycle, including a 25-basis-point rate hike to 1% earlier this week aimed at addressing an energy-driven inflation shock linked to the Middle East conflict. The dollar also strengthened following the Federal Reserve’s decision to leave interest rates unchanged while signaling increasing support for additional rate hikes later this year. The widening policy divergence between Japan and the US continued to weigh on the Japanese currency.

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Offshore Yuan Heads for Weekly Loss

The offshore yuan weakened to around 6.78 per dollar on Friday, putting the currency on track for a weekly loss as a resilient US dollar capitalized on intensifying rate-hike bets. While the Federal Reserve recently left interest rates unchanged as widely anticipated, roughly half of the FOMC policymakers now project at least one additional rate hike by the end of 2026. On the domestic front, traders are closely watching next week’s fixing of the one- and five-year Loan Prime Rates (LPR). The upcoming policy decision carries extra weight following a string of recent data underscoring China’s uneven economic growth. Meanwhile, Hong Kong is set to debut its highly anticipated offshore yuan bond futures this August. The milestone launch represents a strategic push by Beijing to cement the city’s status as a premier global offshore yuan hub while accelerating the broader internationalization of the currency.

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Rupee Rises to 6-Week High

The Indian rupee hovered around 94.2 per dollar, extending gains to a six-week high as improving capital flows lifted investor sentiment. Market participants reported an improvement in foreign-exchange flows, with increased investment into Indian bonds and a slowdown in foreign equity outflows helping strengthen demand for the local currency. This marks a shift from the one-sided dollar demand that had pressured the rupee in recent weeks. The decline in crude oil prices following easing geopolitical tensions has reduced pressure on India’s import bill. Interbank market sentiment has also improved, with traders becoming more willing to take positions on both sides of the market rather than consistently buying dollars on dips, reflecting increased confidence in the rupee. However, the rupee’s gains remain challenged by a stronger dollar, with expectations of tighter Federal Reserve policy boosting demand for the greenback amid persistent inflation concerns.

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Canadian Dollar dips as Fed hawkish outlook, weaker Oil pressure CAD

  • USD/CAD rises 0.21% on Thursday and trades around 1.4130 at the time of writing.
  • The US Dollar remains supported after a hawkish Fed meeting, despite the preliminary US-Iran agreement.
  • Lower Oil prices emphasise downside pressure on the Canadian Dollar.

USD/CAD trades around 1.4130 on Thursday, up 0.21% on the day, as the US Dollar (USD) maintains a positive tone following the Federal Reserve’s (Fed) monetary policy decision. The pair continues to hold above the 1.4100 level, supported by a reassessment of US interest rate expectations.

The Fed left its benchmark interest rate unchanged within the 3.5%-3.75% range, in line with market expectations. However, updated economic projections showed that roughly half of Federal Open Market Committee (FOMC) members expect at least one additional rate hike this year. During his first press conference as head of the central bank, Fed Chair Kevin Warsh reaffirmed his commitment to restoring price stability, highlighting the resilience of the labor market and persistent underlying inflation pressures.

This more restrictive policy outlook continues to support the Greenback, even as safe-haven demand eases following the announcement of a preliminary memorandum of understanding between the United States (US) and Iran aimed at ending hostilities in the Middle East. According to Rabobank, improving geopolitical prospects and a potential full reopening of the Strait of Hormuz could reduce demand for safe-haven assets, but the impact of the Fed’s hawkish shift is currently outweighing those factors for the US Dollar.

On the Canadian side, the Canadian Dollar (CAD) is weighed down by lower Oil prices. West Texas Intermediate (WTI) is hovering below $75 per barrel, down more than 0.90% on Thursday at the time of press. This factor is generally negative for the commodity-linked currency, given the importance of energy exports to the Canadian economy.

At the same time, investors remain focused on the global growth outlook and the potential consequences of higher US interest rates. A further rise in US Treasury yields could continue to favor the US Dollar against the Canadian Dollar, even as overall market sentiment improves.

Canadian Dollar Price Today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD0.33%0.47%0.16%0.16%0.11%0.13%0.56%
EUR-0.33%0.16%-0.15%-0.17%-0.23%-0.25%0.22%
GBP-0.47%-0.16%-0.32%-0.33%-0.37%-0.39%0.05%
JPY-0.16%0.15%0.32%0.02%-0.06%-0.08%0.38%
CAD-0.16%0.17%0.33%-0.02%-0.08%-0.09%0.37%
AUD-0.11%0.23%0.37%0.06%0.08%-0.02%0.44%
NZD-0.13%0.25%0.39%0.08%0.09%0.02%0.47%
CHF-0.56%-0.22%-0.05%-0.38%-0.37%-0.44%-0.47%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).