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NZD/USD falls for fourth day as Middle East war bolsters US Dollar

  • NZD/USD declines for a fourth consecutive day, trading around 0.5820 on Friday.
  • Rising energy prices linked to the Middle East war support the US Dollar and revive inflation concerns.
  • Investors await key US data, including the PCE Price Index, for fresh clues on monetary policy.

NZD/USD extends its decline on Friday, trading around 0.5820 at the time of writing and down 0.58% on the day. The pair records a fourth consecutive daily loss as the US Dollar (USD) strengthens amid rising geopolitical tensions and renewed inflation concerns.

The US Dollar remains supported as investors reassess the outlook for US monetary policy. The US Dollar Index (DXY), which tracks the US dollar against a basket of six major currencies, breaks above 100, closing in on its highest level since November. Higher US Treasury yields are also reinforcing the appeal of the US currency.

The recent surge in Oil prices is fueling fears of more persistent inflationary pressures. Markets now believe that the Federal Reserve (Fed) could delay the start of its easing cycle, as expectations for rate cuts have been significantly reduced in recent days. This environment continues to support the US Dollar and weighs on risk-sensitive currencies such as the New Zealand Dollar (NZD).

Iran’s new Supreme Leader, Mojtaba Khamenei, indicated that closing the Strait of Hormuz could remain part of the country’s strategy to pressure its adversaries, further increasing uncertainty in energy markets. Although the International Energy Agency (IEA) has announced the release of 400 million barrels from strategic reserves to help stabilize supply, Oil prices remain highly volatile.

In this risk-averse environment, the Kiwi remains under pressure. Investors are adopting a more cautious stance amid escalating geopolitical tensions and rising global inflation risks, which continue to weigh on cyclical currencies.

Markets now turn their attention to a busy US economic calendar scheduled for Friday, including the Personal Consumption Expenditures (PCE) Price Index, Gross Domestic Product (GDP) data, Durable Goods Orders, and the University of Michigan Consumer Sentiment Index. These releases could provide further guidance on the trajectory of US monetary policy and influence short-term movements in NZD/USD.

According to analysts at BBH, the strength of the US Dollar is largely driven by risks to shipping through the Strait of Hormuz and the sharp rebound in Oil prices. They note that as long as the Strait remains effectively disrupted, demand for US Dollar funding could keep the Greenback close to its cyclical highs.

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 British Pound.

USDEURGBPJPYCADAUDNZDCHF
USD0.44%0.58%0.06%0.21%0.49%0.56%0.23%
EUR-0.44%0.13%-0.37%-0.23%0.05%0.11%-0.22%
GBP-0.58%-0.13%-0.51%-0.36%-0.08%-0.03%-0.35%
JPY-0.06%0.37%0.51%0.16%0.43%0.48%0.17%
CAD-0.21%0.23%0.36%-0.16%0.27%0.32%0.02%
AUD-0.49%-0.05%0.08%-0.43%-0.27%0.05%-0.26%
NZD-0.56%-0.11%0.03%-0.48%-0.32%-0.05%-0.32%
CHF-0.23%0.22%0.35%-0.17%-0.02%0.26%0.32%

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).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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