NZD/USD pressured by Middle East war, RBNZ rate hike outlook
- NZD/USD falls to around 0.5910 on Wednesday, pressured by renewed risk aversion linked to the Middle East war.
- Rising Oil prices fuel inflation concerns in New Zealand, strengthening expectations of RBNZ rate hikes.
- US inflation data in line with expectations reinforces the view of a cautious Federal Reserve policy stance.
NZD/USD trades lower on Wednesday, hovering around 0.5910 at the time of writing and down 0.38% on the day. The Kiwi remains under pressure as investors stay cautious amid persistent risk aversion in global markets, driven by escalating geopolitical tensions in the Middle East.
The conflict involving the United States (US) and Iran continues to generate uncertainty across financial markets. Military operations in the region are ongoing, while risks of disruptions in the Strait of Hormuz, a key global Oil shipping route, keep energy markets on edge. This situation maintains strong volatility in Oil prices and fuels concerns about rising global inflation.
The recent surge in energy prices is also raising inflation worries in New Zealand. Market analysts expect domestic price pressures to remain more persistent than previously anticipated, reinforcing expectations of future monetary tightening by the Reserve Bank of New Zealand (RBNZ). Markets are now pricing in potential interest rate hikes this year, marking a shift from last month when the central bank signaled that the Official Cash Rate (OCR) could remain around 2.25% throughout the year.
On the US side, the US Dollar (USD) trades higher following the latest inflation release. The Consumer Price Index (CPI) increased by 0.3% MoM in February, in line with market expectations, after a 0.2% rise in January. On an annual basis, headline inflation held steady at 2.4%, while core inflation, which excludes volatile food and energy prices, remained unchanged at 2.5%.
These figures suggest that inflation pressures remain moderate but still above the Federal Reserve’s (Fed) 2% target. As a result, investors expect the Fed to maintain a cautious policy stance in the coming months. According to the CME FedWatch tool, markets widely anticipate that interest rates will remain unchanged at the next meetings, although the probability of a first rate cut gradually increases toward mid-year.
Meanwhile, geopolitical uncertainty continues to support safe-haven demand, which can intermittently benefit the Greenback. Comments from US President Donald Trump suggesting the conflict could end soon contrast with statements from US officials indicating that military operations in Iran are intensifying, leaving markets uncertain about the near-term outlook.
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.39% | 0.11% | 0.51% | 0.16% | -0.39% | 0.37% | 0.25% | |
| EUR | -0.39% | -0.27% | 0.09% | -0.22% | -0.77% | -0.01% | -0.13% | |
| GBP | -0.11% | 0.27% | 0.36% | 0.05% | -0.50% | 0.26% | 0.14% | |
| JPY | -0.51% | -0.09% | -0.36% | -0.35% | -0.89% | -0.15% | -0.26% | |
| CAD | -0.16% | 0.22% | -0.05% | 0.35% | -0.54% | 0.21% | 0.09% | |
| AUD | 0.39% | 0.77% | 0.50% | 0.89% | 0.54% | 0.76% | 0.67% | |
| NZD | -0.37% | 0.01% | -0.26% | 0.15% | -0.21% | -0.76% | -0.12% | |
| CHF | -0.25% | 0.13% | -0.14% | 0.26% | -0.09% | -0.67% | 0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).