FX.co ★ New Zealand Dollar Snaps 2-day Gain

The New Zealand dollar slipped to $0.588, ending a two-day advance, after reports that President Trump was unhappy with Iran’s latest proposal, dimming hopes for progress on reopening the Strait of Hormuz. Under the plan, Iran would reopen the strategic waterway in exchange for the US lifting its blockade on Iranian ports, while negotiations over Tehran’s nuclear program would be postponed to a later stage.

Investors are also awaiting the Federal Reserve’s policy decision, with the central bank widely expected to keep interest rates on hold. Domestically, markets are assigning more than a 60% probability to a rate hike by the Reserve Bank of New Zealand in May, following a stronger-than-expected inflation reading for the first quarter. Price pressures are projected to build further in the second quarter as the full effects of higher energy costs filter through the economy.

Still, sentiment remains cautious, as the conflict in the Middle East threatens to undermine New Zealand’s fragile economic recovery.