The New Zealand dollar hovered around $0.586 after three straight sessions of losses, as escalating tensions in the Middle East kept investors on edge. Intensified fighting in the region earlier this week heightened concerns about broader regional instability and the risk of prolonged disruptions to energy supplies. Some relief emerged, however, after Israel and Lebanon agreed to implement a ceasefire, conditional on Hezbollah halting its attacks. In addition, President Donald Trump said negotiations with Iran were going “very well” and could yield results over the coming weekend, despite denials from Tehran.
The kiwi also found support from rising expectations of tighter monetary policy following a hawkish outlook from the Reserve Bank of New Zealand. Futures markets are now pricing in roughly an 80% probability of a rate hike in July and around 75 basis points of cumulative tightening over the year, equivalent to three quarter-point increases.
