NZD/USD dipped to around 0.5690 during Asian trade on Monday, extending Sunday’s losses as the New Zealand Dollar (NZD) weakened following a 1.0% drop in the ANZ World Commodity Price Index during June, driven by easing Middle East tensions and declining oil prices.
The New Zealand Dollar faces near-term uncertainty as NZIER economists show a near-split on the July monetary policy decision, though the group maintains a unified medium-term outlook. Despite immediate disagreements over the next Official Cash Rate (OCR) move, all members agree the OCR should rise to 3.00-3.25% over the coming year, establishing a clear anchor for future rate expectations.
ANZ expects the Reserve Bank of New Zealand (RBNZ) to raise the OCR by 25 basis points to 2.50% this Wednesday. Even amid sharply lower global oil prices, ANZ argues that persistent inflation risks and a faltering domestic currency justify immediate action, recommending a neutral-to-dovish rate hike to provide the RBNZ with tactical flexibility.
The NZD/USD pair continues declining as the US Dollar strengthens on expectations for multiple Federal Reserve rate increases this year, despite easing global inflation pressures from normalizing oil flows through the Strait of Hormuz.
CME FedWatch data shows markets pricing in a 77.3% probability of Fed rate hikes by year-end, with investors awaiting Wednesday’s release of the Fed’s June policy meeting minutes for clarity on the rate path.
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