New Zealand Dollar holds losses following RBNZ Inflation Expectations release

NZD/USD remains subdued as the New Zealand Dollar saw little movement despite rising one- and two-year RBNZ inflation expectations.
RBNZ's Anna Breman noted Q1 core inflation remained within the target range, signaling progress in stabilizing consumer prices.
US Dollar Index remains firm after Trump’s Middle East comments heightened geopolitical volatility.

Akhtar Faruqui FXStreet

NZD/USD extends its losses for the second successive day, trading around 0.5940 during the Asian hours on Wednesday. The pair remains subdued as the New Zealand Dollar (NZD) moves little following the release of RBNZ Inflation Expectations, which rose on a 12-month time frame and on a two-year time frame for the second quarter of 2026.

New Zealand’s inflation outlook has shifted as two-year expectations climbed to 2.53% for Q2 2026, while one-year expectations surged to 3.41%. These rising figures, coupled with high oil prices driven by ongoing disruptions in the Strait of Hormuz, have complicated the Reserve Bank of New Zealand's (RBNZ) efforts to balance price stability with economic recovery. Consequently, markets have fully priced in a rate hike for July as energy-driven inflation remains a primary concern.

Despite these pressures, RBNZ Governor Anna Breman recently noted that core inflation stayed within the target range during the first quarter. This stability prompted investors to scale back expectations for a rate hike in May, providing a brief reprieve in market bets.

On the fiscal front, New Zealand’s Prime Minister Christopher Luxon used a pre-Budget speech to reaffirm the government’s long-term strategy. Ahead of the May 28 Budget, Luxon committed to achieving a budget surplus by 2028–29 and confirmed a target to reduce national debt toward 40% of GDP.

The NZD/USD pair depreciated as the US Dollar (USD) remained firm on a volatile geopolitical climate in the Middle East following recent comments from US President Donald Trump. While claiming that Iran is "under control," the President warned of a binary outcome: a new deal or total "decimation." In response, Iranian Deputy Foreign Minister Kazem Gharibabadi maintained a firm stance, asserting that any viable peace agreement must include reparations, recognized sovereignty over the Strait of Hormuz, and a complete end to US sanctions.

Economic Indicator

RBNZ Inflation Expectations (QoQ)

The Inflation Expectations released by the Reserve Bank of New Zealand measures business managers´ expectations of annual CPI 2 years from now. An increase in expectations is regarded as inflationary which may anticipate a rise in interest rates. A high reading is positive (or bullish) for the NZD, while a low reading is seen as negative (or bearish).

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.