NZD/USD Falls as Safe-Haven Demand Boosts USD Amid Middle East Tensions

The New Zealand Dollar (NZD) declined against the US Dollar (USD) for the second consecutive day, trading at around 0.5870 during European hours on Thursday. The NZD/USD pair fell as the USD gained support from renewed safe-haven demand following an Israeli airstrike in southern Lebanon. The attack killed one person and injured 11, marking one of Israel's deadliest bombings since the June ceasefire began.

The Reserve Bank of New Zealand (RBNZ) is expected to raise interest rates in September, but a softer-than-expected labor market report has reinforced expectations that any further rate hikes will be gradual. Strategists at Brown Brothers Harriman note that NZD and local yields have come under pressure despite solid jobs data showing underlying slack in the labour market.

The USD could encounter headwinds as market participants weigh reports of a new maritime agreement between Iran and Oman, which may increase Middle Eastern energy flows. However, the US economy's private sector payrolls rose by just 44,000 in July, falling short of expectations.