NZD Stuck Between Hawkish USD and Rate Hike Expectations
The New Zealand Dollar (NZD) is struggling to gain traction despite some early buying interest on Friday, as the US Dollar (USD) remains firm.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, has reached its highest level since June 26 due to escalating US-Iran tensions and hawkish expectations from the US Federal Reserve (Fed).
The recent military strikes by the US against Iran, along with retaliatory attacks on US-linked assets in Kuwait, Bahrain, and Jordan, have fueled inflationary worries and boosted bets that the Fed will raise borrowing costs by the end of the year.
This, in turn, has bolstered support for the USD and capped gains for the NZD/USD pair. However, traders are hesitant to place aggressive bullish bets on the USD, opting instead to move to the sidelines ahead of next week's highly-anticipated FOMC policy meeting.