New Zealand Dollar remains depressed as USD benefits from Iran risks and hawkish Fed
The NZD/USD pair attracts some sellers during the Asian session on Tuesday, though it lacks bearish conviction and remains confined in a familiar range held over the past week or so. Spot prices move little following the release of China's official PMIs and currently trade just below mid-0.5600s, down 0.05% for the day.
An official survey published by the National Bureau of Statistics (NBS) showed that business activity in China's manufacturing sector grew slightly above expectations in June. In fact, the official Manufacturing PMI rose from the 50.0 seen in May to 50.3, slightly above expectations of 50.1. Adding to this, the gauge for the non-manufacturing sector improved to 50.2 in June vs 50.1 in the previous month and forecast for a 49.9 print. The data, however, indicated that business activity barely remained in expansion territory on the back of sluggish domestic demand and weak consumer spending. This, in turn, fails to provide any impetus to antipodean currencies, including the New Zealand Dollar (NZD) and the NZD/USD pair.
The US Dollar (USD), on the other hand, draws some support from persistent geopolitical uncertainties and mixed signals on US-Iran talks. US President Donald Trump wrote on Truth Social that Iran had requested a meeting, and it will take place in Qatar's capital, Doha, on Tuesday. However, Deputy Iranian Foreign Minister Kazem Gharibabadi denied that there were plans for technical talks this week. Furthermore, fresh Israeli strikes on Lebanon keep geopolitical risk premiums in play, which, along with hawkish US Federal Reserve (Fed) bets, underpins the safe-haven USD and weighs on the NZD/USD pair.
According to the CME Group's FedWatch Tool, traders are still pricing in around 63% chance that the US central bank will raise borrowing costs in September and assigning over an 80% probability of a move by the end of this year. Adding to this, renewed US-Iran hostilities sparked inflationary fears, which, in turn, favor the USD bulls. However, the NZD/USD pair, so far, has held above its lowest level since November 2025, touched last week, warranting some caution before positioning for any further depreciating move.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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