NZD on the slide as tension in Middle East escalates
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Daily Currency Update
The New Zealand dollar fell through trade on Tuesday as markets adopted a cautious, risk off stance amid rising tensions in the Middle East. After tracking sideways through much of the domestic session the NZD gave up session highs just south of US$0.6080 following a Truth Social post from President Trump. After leaving the G7 leaders summit early to focus on the Israel-Iran conflict the President posted “everyone should evacuate Tehran”. He then followed the post with a serious of boastful taunts about America’s superior defensive equipment, suggesting the US could easily take out Iran’s supreme leader messaging in all caps “unconditional surrender”. While the White House issues a press release confirming the US would not be joining Israel’s attacks the Presidents posts were enough to elevate fears and drive a risk off mood through markets. The NZD slid toward US$0.60 finding support at US$0.6010.Our attentions remain with the evolving conflict as the key driver of sentiment and direction through the coming 24 hours while the Fed policy meeting tomorrow morning headlines the macro ticket.
Key Movers
The US dollar is broadly stronger this morning as markets moved toward haven assets overnight amid rising tensions in the Middle East and growing fears the US will elevate its involvement in the Israel/Iran conflict. President trump left the G7 leader summit early to focus on “what’s going on in the Middle East” further sparking fears the US is preparing to join Israel’s aerial attacks on Iran by issuing a series of Truth Social posts warning Iranian’s to evacuate Tehran and taunting the Supreme leader Ayatollah Ali Khamenei. Most majors are sitting lower this morning with the GBP the weakest falling below 1.35 and 1.3450 while the euro gave up 1.1550 and 1.15, falling to session lows at 1.1470 before finding support.Our attentions remain affixed to the evolving conflict while the June Fed Policy meeting headlines the macro ticket. While Inflation has printed below expectations the unemployment rate has been steady and we expect the Fed will leave rates on hold, affording itself time to assess the impact of President Trump’s tariff agenda. Policy makers will want to keep options open and we expect they will look to loosen policy conditions only when the data supports it.
Expected Ranges
- NZD/USD: 0.5980 - 0.6080 ▼
- NZD/EUR: 0.5200 - 0.5300 ▼
- GBP/NZD: 2.2200 - 2.2500 ▼
- NZD/AUD: 0.9250 - 0.9320 ▲
- NZD/CAD: 0.8200 - 0.8300 ▲