The New Zealand dollar fell to around $0.562 on the first day of October, its lowest level since November 2025, as broad-based US dollar strength continued to weigh on the currency. Rising US Treasury yields, elevated oil prices and concerns about persistent inflation have strengthened expectations for further Federal Reserve rate hikes. Those inflation concerns have also increased market bets on another Reserve Bank of New Zealand (RBNZ) rate hike at its October meeting. However, stronger US yields and expectations for tighter Federal Reserve policy have outweighed support from higher RBNZ rate expectations. The prolonged conflict in the Middle East and its inflationary effects also threaten New Zealand's economic recovery and are weighing on sentiment toward the currency.