NZD Extends Gains to June Highs Amid RBNZ-Fed Divergence

The New Zealand Dollar has extended its gains to June highs, climbing to around 0.5965-0.5970 against the US Dollar during the Asian session on Friday. This move marks a third consecutive day of buying interest in the NZD/USD pair, with spot prices poised for strong weekly gains.

The divergence between the Federal Reserve's (Fed) and Reserve Bank of New Zealand's (RBNZ) monetary policies is contributing to the NZD's strength. The RBNZ's expectation of another interest rate hike has supported the currency, while the Fed's hawkish FOMC Minutes have kept open the possibility for policy tightening.

However, investors remain cautious due to inflation risks stemming from higher oil prices and geopolitical tensions in the Middle East. President Donald Trump's threat to launch a 'crushing economic operation' against Iran has added to the market uncertainty, limiting losses for the safe-haven US Dollar.