The New Zealand dollar hovered near a two-month low around $0.581 as traders remained cautious following US retaliatory strikes against Iran. Washington said it had carried out self-defense strikes against Tehran in response to the downing of a US helicopter patrolling over the Strait of Hormuz, further clouding the outlook for any peace agreement between the two countries and putting additional pressure on an already fragile ceasefire.
At the same time, investors are awaiting key US inflation data for further guidance on the Federal Reserve’s interest rate trajectory. Providing some support for the kiwi is the prospect of higher domestic rates after the Reserve Bank of New Zealand delivered a hawkish policy outlook. Markets continue to price in the possibility of a rate increase as early as July, with the Official Cash Rate expected to peak at around 3.50% late next year.
