The NZD/CAD currency pair hovered above a 7 1/2-week low of 0.7995 on Friday, as the commodity-linked Canadian Dollar drew support from rising crude oil prices, while tensions in the Middle East continued to weigh on the New Zealand Dollar.
Crude oil gained following a suspected projectile attack on a cargo vessel near Oman. The incident abruptly halted United Nations evacuation activities in the strategically important Strait of Hormuz and has reignited concerns over global energy supply security.
Geopolitical risks intensified after Thursday’s market close, when two US officials indicated that Iranian forces had opened fire on the ship as it attempted to pass through the strait. In response, Iranian authorities issued a sharp warning that the safety of vessels traveling outside officially designated Hormuz shipping lanes is no longer assured.
At the same time, in New Zealand, the RBNZ left the official cash rate unchanged at 2.25% at its May meeting. Analysts suggest that a cooling energy market has provided the central bank with more room to evaluate incoming data before making further policy adjustments.
ASB Bank has revised its policy expectations, abandoning its previous call for a July rate hike. The bank now anticipates that the RBNZ will keep borrowing costs on hold at the upcoming July meeting. It projects a series of steady 25 basis point increases beginning in September, with the official cash rate expected to reach 3.25% by early 2027.
The NZD/CAD currency pair was last up 0.01% on the day to trade at 0.8014.
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