New Zealand Dollar remains subdued as two-year QoQ RBNZ Inflation Expectations ease in Q3

• NZD/USD falls as two-year RBNZ Inflation Expectations fall to 2.34% QoQ in Q3, from 2.53% prior.
• Expectations of another 25-basis-point RBNZ rate hike next month could support the New Zealand Dollar.
• The US Dollar recovered daily losses amid escalating geopolitical tensions between the US and Iran.

NZD/USD extends its losses for the fourth successive day, trading around 0.5840 during the Asian hours on Thursday. The pair remains subdued following the release of RBNZ Inflation Expectations.

New Zealand's inflation expectations eased on a two-year horizon in the third quarter of 2026. Two-year inflation expectations, a key timeframe for monitoring how RBNZ monetary policy filters through to consumer prices, cooled to 2.34% in Q3 2026, down from 2.53% recorded in Q2. Meanwhile, one-year forward inflation projections settled at 2.6%.

However, the NZD/USD pair may halt its losing streak as the New Zealand Dollar (NZD) could draw support from expectations that the Reserve Bank of New Zealand (RBNZ) will deliver another quarter-point rate increase next month.

The NZD/USD pair depreciates as the US Dollar (USD) recovers its daily losses amid escalating geopolitical tensions between the US and Iran. A senior Iranian official noted that Washington and Tehran remain at loggerheads over a permanent end to conflicts in the Gulf, reporting zero progress in reviving the interim deal or establishing an implementation timeline.

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 steadies as energy and food costs ease

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.