NZD Falls to Weekly Low Ahead of FOMC Minutes

The New Zealand Dollar (NZD) declined to its weekly low as the US Dollar (USD) held firm ahead of the FOMC Minutes. The NZD/USD pair extended its retracement slide from the 0.5925 area, dropping back closer to mid-0.5800s during the Asian session.

Inflation risks bolstered US bond yields, underpinning the USD and weighing on spot prices. The RBNZ's hawkish outlook could support the NZD as traders await the FOMC Minutes. President Donald Trump asserted that the US is not engaged in talks with Iran, keeping the geopolitical risk premium in play and supporting the USD.

Brown Brothers Harriman's Elias Haddad argues that 'above target inflation, more favorable domestic growth outlook, and a policy rate near the lower-end of the RBNZ’s neutral range (2.20%-4.10%) argue for additional RBNZ rate hikes.' This would support the NZD and help limit losses for the currency pair.