NZD/USD rebounds toward 0.5900 despite increased risk aversion
NZD/USD inches higher after two days of losses, trading around 0.5880 during the Asian hours on Tuesday. The pair holds ground as the US Dollar (USD) lost its daily gains despite increased safe-haven demand following uncertainty surrounding the Middle East conflict.
CNBC reported on Monday that the United Arab Emirates (UAE) was targeted by Iranian drones and missiles, while the US said it destroyed Iranian boats in the Strait of Hormuz. US President Donald Trump warned that Iran would be “blown off the face of the earth” if it targets US ships protecting commercial vessels passing through the Strait.
Iranian parliament speaker Mohammad Bagher Ghalibaf said on X that “The new equation of the Strait of Hormuz is taking shape. The security of shipping and energy transit has been undermined by the United States and its allies through ceasefire violations and blockade measures; however, their actions will ultimately fail. We fully understand that maintaining the current situation is unacceptable for the US, while we have not even begun yet.”
However, the Greenback may regain its ground amid expectations that the Federal Reserve (Fed) may need to lift interest rates to curb inflation. Minneapolis Fed President Neel Kashkari said Sunday that additional rate hikes cannot be ruled out, especially as inflation risks remain elevated due to higher energy prices linked to the Iran conflict.
Traders are awaiting New Zealand’s first-quarter employment report due Wednesday for fresh insight into the economy’s resilience amid the Middle East energy shock. RBNZ board member Prasanna Gai said models of a Strait of Hormuz disruption do not imply an automatic tightening bias, though they have lifted the neutral rate.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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