The New Zealand dollar hovered around $0.578, showing no clear direction as investors awaited the US Federal Reserve’s policy decision and tracked escalating tensions in the Middle East. While the prevailing view is that the Fed will leave interest rates unchanged, markets are still pricing in roughly a one-in-three chance of a 25-basis-point increase.
Geopolitical risks have re-emerged after the US reported intercepting Iranian missile attacks targeting forces stationed in the region, ending a brief lull in hostilities and heightening concerns over a possible broader conflict.
Investors are also looking ahead to New Zealand’s upcoming business confidence and consumer sentiment releases later this week for further insight into the domestic economic outlook. The Reserve Bank of New Zealand is widely expected to deliver another 25-basis-point rate hike in September following stronger-than-expected inflation data last week. Market pricing suggests the policy rate will reach at least 3.0% by year-end and peak around 3.5% by mid-2027.
