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NZD/USD falls for third day as US dollar demand rises on Middle East jitters
The pair was last around 0.5860, down 0.28% on the day, as traders looked to upcoming US CPI data that could shift Fed rate expectations.
The New Zealand dollar slid against the US dollar for a third straight session, with NZD/USD trading around 0.5860 and down 0.28% on the day, FXStreet reported. The move reflects pressure on the risk-sensitive Kiwi amid uncertainty tied to US and Iran negotiations.
FXStreet said demand for the greenback was supported by reports that Washington and Tehran are drawing closer to an agreement involving the Strait of Hormuz, while parallel talks between Iran and Oman have reportedly progressed. However, investors have remained cautious as President Donald Trump’s reparations demands for attacks linked to Iran have added uncertainty, and there was also no clear start date mentioned for any extension of the Iran US ceasefire, according to Reuters.
Market focus is shifting to US inflation data later Wednesday, with the Consumer Price Index expected to rise 0.1% month over month in July and core CPI forecast to increase 0.2%, according to FXStreet. On an annual basis, headline inflation is expected to ease to 3.4% and core to 2.5%, which could influence expectations for the Federal Reserve’s next decision, the outlet added.
FXStreet noted that after the Fed kept interest rates unchanged in July, traders were still split on a potential September tightening, with CME FedWatch pricing about a 46% chance of a 25 basis point hike, down from 54.4% a week earlier. In New Zealand, the outlet said expectations for a September rate hike by the Reserve Bank of New Zealand provided some support to the Kiwi, even as domestic political uncertainty added caution.