Australian dollar wait for Gulf deal, kiwi slips after big weekly gains

SYDNEY: The Australian dollar waited in the wings for a peace deal in the Gulf on Monday, tracking mostly sideways, while the kiwi slipped after a big week of gains as markets wagered on imminent rate hikes.

The Aussie was steady at $0.7186, after gaining 0.8% last week to as high as 72 cents on hopes for an imminent peace deal to resolve the Iran war and reopen the Strait of Hormuz. For May, it slipped 0.3%, with support around 71 cents.

The kiwi dollar fared better, having rallied 2.5% last week to a three-month top of $0.5994. It slipped 0.3% on Monday to $0.5970, having run into resistance at $0.5991.

It was up 1.4% in May.

The kiwi has been lifted by a hawkish hold decision from its central bank last week, which led investors to price in an 80% probability of a rate hike next month.

For all of 2026, there is a total tightening of about 75 basis points, equivalent to three rate hikes.

The Reserve Bank of Australia has, however, signalled a wait-and-see approach after three rate hikes this year.

The contrast in their rate outlook has sent the Aussie down a whopping 2.3% over the past three sessions to a two-month low of NZ$1.1955 before bouncing 0.3% on Monday.

“The start of the RBNZ rate hiking cycle will likely buckle the year-to-date AUDNZD spot uptrend, in our view,” said analysts at TD Securities in a note.

“That being said, we expect some short-term spot consolidation after the selloff… we believe it’s unlikely for AUDNZD to fall on further bullish NZD catalysts in the near-term.”

Australia will release its first-quarter GDP data on Wednesday where forecasts are centred on a 0.5% quarterly gain, slowing from 0.8% the previous quarter as war impact and rate hikes took a toll.

RBA Governor Michele Bullock will appear before lawmakers on Thursday and Deputy Governor Andrew Hauser will speak at an event in Sydney on Friday.

Both could sound hawkish given inflation is still above target.

Recent misses on employment and inflation data have led investors to sharply pare the chance of a June hike to just 5%, and there is a small chance that the RBA’s tightening cycle could be already over.