Key Moments
- NZD/USD traded near 0.5840 in Asian hours, extending its decline for a fourth straight session following the latest RBNZ inflation expectations data.
- RBNZ two-year inflation expectations eased to 2.34% in Q3 2026 from 2.53% in Q2, while one-year projections stood at 2.6%.
- The US Dollar regained intraday losses amid heightened tensions between the US and Iran and steady US inflation supported by weaker energy and food prices.
NZD/USD Slips as RBNZ Inflation Expectations Cool
NZD/USD remained under selling pressure during Asian trading on Thursday, sliding for a fourth consecutive day and changing hands around 0.5840. The pair stayed on the back foot after the release of the Reserve Bank of New Zealand’s (RBNZ) latest inflation expectations survey.
New Zealand’s inflation outlook moderated over the two-year horizon in the third quarter of 2026. Two-year inflation expectations – a key gauge for assessing how RBNZ policy settings filter through to consumer prices – eased to 2.34% in Q3 2026, compared with 2.53% in Q2. One-year ahead inflation projections were reported at 2.6%.
Despite the softer inflation outlook, the New Zealand Dollar could find some support from market expectations that the RBNZ may implement an additional 25-basis-point interest rate increase next month, which could help stem further losses in NZD/USD.
US Dollar Firms on Geopolitical Tensions
The NZD/USD decline has also been driven by renewed strength in the US Dollar, which recovered earlier daily losses as geopolitical strains between the United States and Iran intensified.
A senior Iranian official indicated that Washington and Tehran remain deeply divided over a lasting resolution to conflicts in the Gulf, citing no progress on reviving an interim deal or agreeing on a timetable for its implementation.
President Donald Trump stated that the US has “total control” over the strategic waterway amid heightened rhetoric between Washington and Tehran, while diplomatic talks remain stalled. Meanwhile, the Trump administration is pushing to ramp up economic pressure on Iran as military actions have yet to bring the regime into compliance. Planned measures include broadening economic sanctions and implementing a naval blockade to restrict Iranian oil exports.
US Inflation Dynamics: Energy and Food Prices Provide Relief
On the macroeconomic front, the US inflation backdrop has remained contained, aided by easing energy and food costs.
According to TD Securities, consumer price inflation in the US “matched expectations in July,” with the headline index rising “0.1% m/m (0.074% before rounding; TD: 0.15%, consensus: 0.1%).” The firm notes that the modest increase was “partly explained by still retreating energy prices (gasoline -3% m/m) and slowing food inflation,” underscoring that softer fuel and food costs helped contain overall price pressures during the month.
Key Data Summary
| Indicator | Period | Latest Value | Previous Value / Reference |
|---|---|---|---|
| NZD/USD exchange rate | Asian hours, Thursday | Around 0.5840 | Extending a four-day losing streak |
| RBNZ 2-year inflation expectations | Q3 2026 | 2.34% | 2.53% (Q2) |
| RBNZ 1-year inflation projections | Latest | 2.6% | Not specified |
| US CPI headline (m/m) | July | 0.1% (0.074% before rounding) | TD: 0.15%, consensus: 0.1% |
| US gasoline prices (m/m) | July | -3% | Contributed to retreating energy prices |
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