SYDNEY: The New Zealand dollar fell to a near six-week low on Tuesday as its US counterpart basked in the afterglow of Federal Reserve Chair Jerome Powell’s renomination for a second term, with some betting a quicker track to the start of US rate hikes.

The kiwi, which has been underpinned in recent weeks by the domestic impetus to tighten policy further, was down 0.3% to reach $0.6933, the lowest since Oct 13.

The Reserve Bank of New Zealand (RBNZ) is widely expected to follow up its October rate hike with another 25-basis-point increase at its review on Wednesday. Some analysts say a bigger 50-bps increase can’t be ruled out given the threat posed by rising inflation.

Globally, central banks are grappling with the risks of intensifying price pressures and the need to carefully calibrate any rate increases lest they derail their economies.

US President Joe Biden’s renomination of Powell for a second term reinforced market expectations of rate rises next year, with some wagering on a quicker start to tightening once the Fed is done with tapering of its emergency bond-buying programme.

The Aussie was little changed, hovering near recent lows at $0.7230 on its US peer, but was supported by higher prices in iron ore futures.

“The main headwind for NZD/USD continues to come from the surging US dollar, which is supported by rising expectations of the Fed,” said Westpac strategists Imre Speizer, referring to rate-hike views.

The RBNZ’s monetary policy decision on Wednesday is likely to be a catalyst for price volatility in the kiwi, strategists said.