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NZD/USD stays near 0.5880 as US dollar firms on Middle East risk
US Dollar safe-haven demand is linked to Strait of Hormuz reopening talks, while firmer oil prices are keeping US Treasury yields and Fed tightening expectations elevated.
FXStreet reports that NZD/USD is trading around 0.5880 and is virtually unchanged on the day, with the New Zealand dollar remaining under pressure.
The outlet attributes the pressure to US dollar safe-haven demand amid geopolitical uncertainty, including renewed focus on negotiations around reopening the Strait of Hormuz. Qatar said talks between Iran and Oman have reached an advanced stage, though it cautioned the negotiations are at a critical juncture, with Tehran also linking reopening to steps that include sanctions relief and other conditions.
FXStreet also points to oil price support for US rates and the dollar. West Texas Intermediate is around $82.10 and is up more than 6% since the start of the week, and higher energy prices are seen as reviving concerns about US inflation, helping keep Treasury yields elevated.
The article adds that expectations for further Fed tightening have increased, with CME FedWatch putting the chance of a 25-basis-point hike at the September meeting at about 50%, up from roughly 42% on Friday. Markets are also awaiting US CPI on Wednesday, while developments around the Strait of Hormuz and oil prices are expected to keep influencing the US dollar and NZD/USD.