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NZD/USD slips for third day as USD gains safe haven bid
The NZD fell to around 0.5870 as Middle East uncertainty boosted demand for the US dollar, while traders looked ahead to a US inflation report that could shape the Fed’s next move.
NZD/USD extended losses for a third straight day, trading around 0.5870 during Wednesday’s Asian session, as the US dollar strengthened on increased safe haven demand linked to uncertainty around Middle East peace talks, FXStreet reported.
FXStreet noted that markets weighed developments involving the Strait of Hormuz, including comments suggesting Washington and Tehran were approaching an agreement, alongside reports that Iran and Oman negotiations had progressed. US President Donald Trump’s stance that Tehran must pay reparations added fresh caution for traders.
The article said market participants were likely watching the upcoming US inflation report later in the day because it could influence the Federal Reserve’s next interest rate decision. Analysts at Commerzbank pointed to the question of whether inflation is falling quickly enough to limit the need for further Fed rate increases, which would affect the medium term dollar outlook and US yields.
FXStreet also cited shifting rate expectations: odds for a 25 basis point Fed hike in September softened slightly to nearly 48% after the Fed held rates steady in July, according to the CME FedWatch Tool.
On the New Zealand side, FXStreet said markets remained set on a September rate hike from the Reserve Bank of New Zealand as policymakers signal further tightening to withdraw monetary stimulus and contain inflation. It also mentioned New Zealand Prime Minister Christopher Luxon survived a second leadership challenge in four months.