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NZ dollar extends hawkish RBNZ-inspired rally to three-week high
NZD/USD trades around 0.5775 to 0.5780 after the RBNZ raised its Official Cash Rate to 2.50% and amid a weaker US dollar following mixed FOMC signals.
The New Zealand dollar extended its rally against the US dollar for a third straight day, pushing NZD/USD to an over three-week high during Friday’s Asian session. Spot prices were last seen around the 0.5775 to 0.5780 area, up nearly 0.40% on the day and on course for a second consecutive week of gains, FXStreet reported.
FXStreet linked the strength in NZD/USD to a hawkish Reserve Bank of New Zealand outlook and a broadly weaker US dollar. The RBNZ raised the Official Cash Rate by 25 basis points to 2.50% after its June meeting, and signaled some further reduction in monetary stimulus is likely needed to contain inflationary pressures.
At the same time, recent US policy signals have weighed on the greenback. According to the FOMC June 16 to 17 minutes, policymakers were divided on the direction of interest rates, with many participants suggesting the federal funds rate could be within or slightly below the current target range by year end.
FXStreet also cited a shifting geopolitical risk premium that can influence safe-haven demand for the USD. The report noted renewed Middle East tensions after US strikes on Iran-related targets, then said market anxiety eased after Trump claimed Iran called to make a deal with the US, while it added that there is no major US economic data due on Friday, leaving the dollar exposed to FOMC comments and ongoing developments in the region.