The New Zealand dollar slipped to around $0.562 on the first day of October, its lowest level since November 2025, as broad-based US dollar strength continued to pressure the currency. The greenback was bolstered by a sustained rise in US Treasury yields, while elevated oil prices stoked concerns about persistent inflation and reinforced expectations of further interest rate hikes by the Federal Reserve. For similar reasons, markets have also increased bets on another rate hike by the Reserve Bank of New Zealand at its October meeting. However, the support from higher RBNZ rate expectations has been overshadowed by the stronger rise in US yields and the prospect of tighter Fed policy, keeping the US dollar firmly supported. In addition, the protracted conflict in the Middle East and its inflationary consequences pose further risks to New Zealand’s economic recovery, adding to the downward pressure on the kiwi.