Kiwi Dives Near Two-Month Low as RBNZ's Rate Hike Fails to Boost NZD

The New Zealand Dollar (NZD) has been struggling against the US Dollar (USD), trading near a two-month low of 0.5700. The NZD/USD pair has been under pressure due to the Reserve Bank of New Zealand's (RBNZ) dovish rate hike, which came amidst weak domestic growth. In contrast, the US Federal Reserve maintained a relatively hawkish stance and signaled at least one more follow-up move this year.

Nordea economists highlighted that the US economy remains resilient, with inflationary pressures showing few signs of easing and the labour market holding up well. This strengthens the case for a more restrictive monetary policy stance, with Nordea reiterating its forecast for two more hikes.

The geopolitical tensions in the Middle East, particularly between Iran and Saudi Arabia, are also supporting the US Dollar. However, oil prices have dropped to an over one-week low, alleviating immediate fears of runaway inflation and holding back USD bulls from placing aggressive bets.