Reported missile strikes on commercial vessels in the Strait of Hormuz pushed investors toward the US Dollar on Tuesday, dragging NZD/USD to a second straight daily loss near 0.5700. ING expects an RBNZ hike this week, but sees little follow-through for the Kiwi.
The New Zealand Dollar slipped for a second consecutive session, with NZD/USD hovering near 0.5700 during Asian trading on Tuesday. A resilient US Dollar kept the pair on the back foot, and the move traced back to fresh geopolitical worry over a key global shipping corridor.
Hormuz strikes drive dollar demand
Citing a US official, Bloomberg reported that Iran fired at least two missiles at commercial vessels crossing the Strait of Hormuz late Monday. Two ships reportedly took significant damage, though there were no casualties.
Separately, the UK Maritime Trade Operations said a southbound tanker was hit on its port side by an unidentified projectile, starting a fire onboard. The incidents reinforced demand for the dollar as investors weighed the risks around a critical maritime chokepoint.
Fed hike bets fade after soft jobs data
At the same time, traders have trimmed expectations for further Federal Reserve rate hikes this month and in September. That shift follows an employment report showing job creation in April, May, and June came in below Wall Street forecasts.
A recent slide in crude oil prices has fed the same rethink. The drop, attributed to an OPEC+ production increase and a US-Iran peace deal, has eased broader inflation pressures and cut the perceived need for a more aggressive Fed.
RBNZ hike may not steady the Kiwi
Despite the fall in oil prices, ING expects the Reserve Bank of New Zealand to deliver a 25-basis-point "insurance" hike to 2.50% on Wednesday. The firm warns, however, that the move may be a one-off and may not offer lasting support for the New Zealand Dollar.
Source: TradingPedia
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