The New Zealand dollar eased to around $0.592 on Tuesday, extending losses from the previous session as deteriorating risk sentiment overshadowed support from expectations of higher interest rates. Investor caution persisted amid ongoing uncertainty over a potential Middle East peace deal, with mixed signals from the US and Iran and renewed tensions near the Strait of Hormuz heightening concerns about prolonged geopolitical and trade disruptions.
The currency’s decline was partly limited by expectations of tighter monetary policy following hawkish communication from the Reserve Bank of New Zealand. Markets are now pricing in roughly an 80% probability of a rate hike in July and about 75 basis points of cumulative tightening over the year, equivalent to three quarter-point increases.
