FX.co ★ Kiwi Dollar Holds Firm, Inflation Data Eyed

The New Zealand dollar hovered near a six-week high around $0.584, supported by expectations that the Reserve Bank of New Zealand will continue lifting interest rates. This outlook has helped the currency hold up despite a broader pullback from risk-sensitive assets amid rising tensions in the Middle East. Markets are still pricing in two additional 25-basis-point rate hikes this year, following hawkish guidance from the central bank and a run of stronger-than-expected economic data.

Investors are now focused on New Zealand’s second-quarter CPI release, with annual inflation forecast to reach or even surpass 4%. That would mark the highest rate in more than two years, largely driven by rising fuel costs. The prospect of further monetary tightening has continued to bolster the kiwi, enabling it to outperform even as escalating exchanges of attacks between the US and Iran weigh on global risk appetite.