- NZD/USD weakens as risk aversion increases after fresh Israeli strikes hit Tehran.
- Israel struck Iran despite Trump signaling a pause in energy attacks.
- RBNZ Governor Breman warned that near-term inflation may rise due to energy shocks.
NZD/USD has pared its recent gains from the previous day, trading around 0.5830 during the Asian session on Tuesday. The pair depreciates as the US Dollar (USD) gains on increased risk aversion after the Israeli military said it had launched a fresh wave of strikes on Tehran.
Israel launched its latest strike on Iran despite US President Donald Trump signaling a pause in attacks on energy infrastructure following what he described as productive talks with Tehran. The Israeli Defense Forces (IDF) said operations would continue in line with government directives until further notice.
Moreover, Iran’s Foreign Minister Abbas Araghchi denied any dialogue with Washington. Iranian Parliament Speaker Mohammad Bagher Ghalibaf also stated on Monday that no negotiations had taken place with the US. Meanwhile, senior military adviser Mohsen Rezaei said the conflict would continue until Iran receives full compensation for the damage incurred.
Reuters reported that San Francisco Fed President Mary Daly said that unless the Iran conflict eases quickly and the Fed can look through a temporary oil price spike, the outlook for interest rates remains uncertain.
Reserve Bank of New Zealand (RBNZ) Governor Anna Breman noted that near-term inflation could rise due to energy shocks. While the central bank may look past temporary price spikes, she signaled that rate hikes could be required if inflation pressures become persistent.
