- NZD/USD softens to near 0.5700 in Tuesday’s Asian session.
- Trump insisted on Hormuz opening as he escalated Iran threats.
- The RBNZ rate decision will be in the spotlight later on Wednesday, with no change in rate expected.
The NZD/USD pair attracts some sellers to around 0.5700 during the Asian trading hours on Tuesday. The US Dollar (USD) strengthens against the New Zealand Dollar (NZD) as heightened uncertainty in the Middle East boosts demand for a safe-haven currency.
US President Donald Trump said on Monday that freedom of navigation through the Strait of Hormuz would be part of any deal to end the Middle East war and escalated threats to attack key Iranian infrastructures if his terms aren’t met before a Tuesday deadline at 8 p.m. Eastern Time (00:00 GMT Wednesday), per Bloomberg.
Iran has also retaliated by saying that it will respond to Trump’s threats by ramping up its own attacks on energy infrastructure in the Gulf. Rising tensions in the Middle East could provide some support to the Greenback and act as a headwind for the pair in the near term.
However, the downbeat US economic data might cap the upside for the USD. The US Services Purchasing Managers Index (PMI) declined to 54.0 in March from 56.1 in February, the Institute for Supply Management (ISM) showed on Monday. This reading came in below the market consensus of 55.0.
The Reserve Bank of New Zealand (RBNZ) is expected to keep interest rates unchanged at its April meeting on Wednesday and restate its willingness to look through the initial inflationary impact of surging fuel prices that threaten a stuttering recovery. Governor Anna Breman will hold a press conference after the policy meeting. Markets and analysts anticipate a potential rate hike to 2.50% by the end of 2026.
