01.04.202609:05:11UTC+00New Zealand Dollar Extends Gains

The New Zealand dollar climbed to $0.576, extending its rebound from a four-month low as risk sentiment improved following signals from the US that the conflict in the Middle East could soon end. President Trump said US military operations in Iran could be wrapped up within two or three weeks, with or without an agreement, adding that Washington had already met its key objectives.

The conflict has disrupted global financial markets, stoking fears of higher inflation and weaker economic growth. The RBNZ recently cautioned that surging oil prices linked to the conflict risk driving inflation higher and squeezing household spending. Governor Anna Breman said the central bank would look through short-lived, energy-driven spikes in inflation, but indicated that interest rates could rise if price pressures begin to jeopardize longer-term inflation expectations.

The RBNZ is widely expected to leave interest rates unchanged at next week’s meeting, while the implied probability of a rate hike in May has dropped to 25%, down from 60% at the end of last week.