Market Wrap: Kiwi Rises on China Hopes; Oil Jumps on Iran Risks

Currency and commodity markets displayed divergent trends regarding risk sentiment on Wednesday, driven by a combination of geopolitical tensions in the Middle East and central bank commentary from the UK and New Zealand.

• NZD/USD: Climbed approximately 0.25% to test the 0.5750 handle.
• WTI Crude Oil: Reached multi-month highs near levels not seen since late October.
• Sterling (GBP): Supported by wage growth focus for 2025.

NZD/USD Capitalizes on Chinese Data

The New Zealand Dollar (NZD) outperformed broadly, with NZD/USD climbing approximately 0.25% to test the 0.5750 handle. The move was primarily catalyzed by upbeat trade balance data from China, New Zealand's largest trading partner, which alleviated some concerns regarding demand in the Asian manufacturing hub. However, gains remain capped by a resilient US Dollar, which paused its recent rally but remains supported by expectations of a Federal Reserve hold in January.

BoE's Ramsden Flags Wage Stickiness

Sterling (GBP) traders received a hawkish reminder from Bank of England Deputy Governor David Ramsden. Speaking in London, Ramsden emphasized that wage growth remains a “key focus” for 2025, signaling that the BoE views current policy as appropriately restrictive. His comments suggest the BoE may be slower to ease policy compared to its peers, potentially offering support to GBP crosses if UK inflation data remains stubborn.

WTI Crude Hits Multi-Month Highs

In the commodities sector, WTI Crude Oil extended its winning streak for a fifth consecutive day, reaching levels not seen since late October. The rally is being driven by a renewed geopolitical risk premium following escalating unrest in Iran. Traders are pricing in potential supply disruptions in the region, overshadowing doubts about global demand growth. If tensions persist, the energy sector could act as a renewed inflationary force, complicating the task for global central banks.