The New Zealand dollar has dropped after yesterday’s announcement from US President Donald Trump that the US is pulling out of the Iran nuclear deal. The commodity currencies including the New Zealand dollar are seeing an immediate reaction to the proposed sanctions on Tehran. Trump has stated that the international agreement which was also backed by the UK and France was a one sided deal that should never have been made.
The fall in the commodity currencies is due to perceived higher geopolitical risk. The New Zealand dollar could have further to fall in light of these latest developments and if tensions escalate in the Middle East. There is a huge amount of uncertainty from these developments and there is no reason the dollar shouldn’t weaken further. Clients looking to sell New Zealand dollars may wish to consider taking the risk out of the markets. There is every chance the GBP NZD pair could have a push higher to 2 dollars.
The Reserve Bank of New Zealand meets later today for the latest interest rate decision. The general view is that interest rates will remain on hold for this month under new governor Adrian Orr. Inflation has been weak in New Zealand and this is likely to be the reason why the central bank refrains from taking action.
There is currently a good opportunity to buy New Zealand dollars with pounds with rates sitting just below 1.95 for the pair. The Bank of England interest meeting is certainly one to watch tomorrow although clients looking to buy dollars are unlikely to see material gains as the central bank is unlikely to hike tomorrow.
For more information on the New Zealand dollar and how to make the most of any opportunities on the back of events then please get in touch with me at [email protected]