Forex
Home›Forex›Major Pairs›New Zealand dollar firms as sticky inflation fears and…
New Zealand dollar firms as sticky inflation fears and Red Sea risks weigh
NZD/USD was around 0.5840 after New Zealand food inflation cooled to 2.5% year over year in June, while high oil prices and Middle East escalation added rate-hike expectations.
The New Zealand dollar edged higher against the US dollar, with NZD/USD trading around 0.5840 during Friday’s Asian session after minor losses the day before, according to FXStreet. The pair’s uptick came as New Zealand’s latest food inflation data showed some cooling, but not enough to remove concerns about persistently elevated prices.
Food prices rose 0.6% month over month in June 2026, easing from 1.0% in May, and annual food inflation slowed to 2.5% from 3.2%. FXStreet said the Kiwi also continued to draw support from the backdrop of high oil prices, which are keeping inflation fears alive and are linked to expectations for further Reserve Bank of New Zealand interest-rate hikes.
FXStreet added that RBNZ chief economist Paul Conway has warned that sticky inflation could prompt the central bank to raise rates again. At the same time, market attention is focused on escalating Middle East developments, including reports that Iran has told Yemen’s Houthi militia to stand ready to close the Red Sea oil route if the US strikes Iranian power infrastructure.
FXStreet noted that Reuters reported the Red Sea route could be targeted in the event of US action, alongside other reports of explosions in several locations in the region. It said these risks could lift demand for safe havens such as the US dollar, creating a potential headwind for NZD/USD in the near term.