New Zealand Dollar Hits 11-Week Low

The New Zealand dollar fell to around $0.572, the lowest in eleven weeks, weighed down by a firm US dollar. The greenback strengthens amid increased bets on a US rate hike following the Federal Reserve’s hawkish signals. Meanwhile, US–Iran talks in Switzerland have made encouraging progress, with technical-level discussions set to continue this week, easing earlier concerns after President Donald Trump again warned of strikes on Iran over its support for Hezbollah. New Zealand’s GDP data released last week suggested that economic recovery was gaining momentum. However, the figures largely reflected conditions prior to the escalation in Middle East conflict. As a result, forecasts show GDP to barely grow or even contract in the second quarter. Markets continue to price in a 25-bps hike in July given the RBNZ’s hawkish outlook, though swap pricing imply only two increases this year rather than the three previously expected.

The New Zealand dollar dropped to $0.573, its lowest level in over two months, pressured by a stronger US dollar following the Federal Reserve's hawkish hold. Losses were partly offset by improving risk sentiment after the US and Iran remotely signed a memorandum of understanding to end their war. On the data front, New Zealand’s economy grew 0.8% in the March 2026 quarter, following a 0.5% expansion in the prior quarter but missing the Reserve Bank’s 1.0% forecast. Annual GDP rose 1.5%, beating market expectations of a 1.1% rise. While the data suggested economic recovery was gaining momentum, it largely reflected conditions before the escalation of the Middle East war. Forecasts now show GDP to barely grow or even contract in Q2. Still, traders continue to price in a 25 bps hike in July given the RBNZ’s hawkish outlook, though swap pricing now imply only two increases this year rather than the three previously anticipated. The kiwi is down more than 1% so far this week.

The New Zealand dollar traded around $0.582, moving in a narrow range as investors awaited the country's first-quarter GDP data for fresh clues on the state of the economy. The report, due on Thursday, is expected to show solid growth in the first three months of the year, before the Middle East fuel shock begins to weigh on consumer spending and business sentiment. On the monetary policy front, expectations for the Reserve Bank of New Zealand remain tilted toward tightening in July, although swap pricing now implies two rate hikes for the year, compared with earlier expectations of three. Externally, attention is on the US Federal Reserve's policy decision on Wednesday, with the bank widely expected to hold rates steady at its first meeting under new chair Kevin Warsh. Markets are also awaiting further details on a US–Iran agreement that could pave the way for the full reopening of the Strait of Hormuz.