FX.co ★ New Zealand Dollar Firms Up

The New Zealand dollar inched up to about $0.589, revisiting a two-month high as improving diplomatic developments in the Middle East lifted risk sentiment. Iran and Oman reported an agreement on the geographic coordinates of a temporary commercial shipping corridor through the Strait of Hormuz, easing worries about prolonged disruptions to energy supplies. The kiwi had retreated in the previous session after a weaker-than-expected labor market report, which strengthened the view that any further interest rate increases would likely be gradual rather than aggressive. Even so, markets continued to price in a 25-basis-point rate hike in September, after the Reserve Bank of New Zealand signaled at its latest meeting that additional tightening may still be required to withdraw monetary stimulus and bring inflation under control.