NZD/USD slips below 0.5750 amid increased risk aversion

NZD/USD extends its losing streak for the fifth successive day, trading around 0.5730 during the Asian hours on Monday. The pair depreciates as risk aversion intensifies amid fears of a potential United States (US) ground invasion in Iran.

A Wall Street Journal (WSJ) report indicated last week that the US Pentagon is considering sending 10,000 additional troops to Iran. In response, Ebrahim Zolfaqari issued a stark warning on Iranian state TV, stating that “US troops will be good food for sharks of the Persian Gulf.”

On the macro front, US economic data releases this week, including various labor market-linked indicators, particularly the Nonfarm Payrolls (NFP), as well as the ISM Purchasing Managers’ Index (PMI), are expected to influence market expectations for the Federal Reserve (Fed) monetary policy outlook.

In New Zealand, the ANZ–Roy Morgan Consumer Confidence Index fell sharply to 91.3 in March from 100.1 in February, marking a notable reversal amid uncertainty driven by the Middle East conflict, data showed last week.

ANZ Business Confidence and Activity Outlook figures are also due on Tuesday. Additionally, investors are also likely watching China’s March PMI readings, both official and private, given the country’s role as New Zealand’s largest trading partner, which adds to the cautious market tone.

Meanwhile, Reserve Bank of New Zealand (RBNZ) Governor Anna Breman stated last week that the central bank would look through temporary energy-driven inflation but stands ready to hike interest rates if persistent price pressures risk unanchoring inflation expectations. Since the conflict began, markets have increasingly priced in the possibility of earlier policy tightening to counter rising energy costs.