Forex News: NZ Dollar Slips On Prolonged Middle East War

NZ Dollar Slips On Prolonged Middle East War Concerns

(RTTNews) - The New Zealand dollar weakened against most major currencies in the Asian session on Tuesday, due to the possibility of an extended war in the Middle East.

Several U.S. allies, including Germany, Spain, Italy, Australia and Japan have declined President Donald Trump's request to secure the Strait of Hormuz, a vital artery for a fifth of global energy shipments. The U.K. and France said they are willing to discuss options.

As the U.S.-Israel war with Iran entered day 18, the Israeli military said it had begun a "wide-scale wave of strikes" across Iran's capital and was also stepping up strikes on Iran-backed Hezbollah targets in Lebanon.

The United Arab Emirates briefly closed its airspace after a drone attack on Dubai Airport that caused a fire in a fuel tank.

U.S. President Trump claimed Iran's retaliatory strikes on Gulf nations were unexpected and that he does not believe Israel would use a nuclear weapon in its war with Iran.

Iran's Foreign Minister Abbas Araghchi said during a weekly briefing that Tehran had shown it was ready to take the war with Israel and the United States as far as necessary.

As inflation risks mount, investors now look ahead to the monetary policy announcements from central banks, including the Federal Reserve, the European Central Bank and the Bank of England.

The Federal Reserve's policy decision is scheduled for Wednesday, with economists expecting the central bank to leave interest rates unchanged.

Market participants will closely watch updated economic projections and comments from Fed Chair Jerome Powell for additional clues on the Fed's rate trajectory.

Crude oil prices slipped as the blockade of the Strait of Hormuz showed mild signs of easing. West Texas Intermediate crude for April delivery was down $5.38 or 5.45 percent at $93.33 per barrel.

On Thursday, the focus will turn to New Zealand's GDP for the fourth quarter (Q4). The GDPs are expected to increase by 0.4% on a quarterly basis and 1.6% on an annual basis. The Kiwi could strengthen vs the USD if the reports indicate better-than-expected results.

In the Asian trading today, the NZ dollar rose to a 13-year low of 1.2149 against the Australian dollar, from yesterday's closing value of 1.2067. The kiwi may test support around the 1.22 region.

The NZ dollar fell to 92.71 against the yen, from an early an early 4-day high of 93.31. The kiwi is likely to find support around the 91.00 region.

Against the U.S. dollar and the euro, the kiwi slipped to 0.5817 and 1.9726 from yesterday's closing quotes of 0.5861 and 1.9631, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.56 against the greenback and 2.00 against the euro.

Looking ahead, Germany's ZEW economic confidence survey data is due to be released at 6:00 am ET. The economic confidence index is forecast to fall sharply to 38.9 in March from 58.3 in February.

In the New York session, U.S. ADP weekly employment data, U.S. New York Fed services activity index for March, U.S. Redbook report and U.S. pending home sales data for February are slated for release.

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