FX.co ★ New Zealand Dollar Remains Under Pressure

The New Zealand dollar traded near a seven-month low around $0.564, pressured by a broadly stronger US dollar and mounting concerns over the domestic growth outlook. While the recent decline in oil prices following a US-Iran deal has eased some near-term inflation worries, the wider economic fallout from the earlier energy shock remains. Expectations for aggressive tightening by the Reserve Bank of New Zealand have been pared back: markets now assign roughly a 66% probability to a July rate hike, down from more than 80% a few weeks ago, and are pricing in only two rate increases this year instead of three. Investors are now looking to this week’s business and consumer confidence readings for further insight into the economy’s health, with the country’s four major banks expecting that GDP contracted in the second quarter.