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NZD/USD rises as US Treasury yields fall and USD weakens
The US 10-year Treasury yield dropped to 4.651%, while the US Treasury plans to expand parts of longer-dated buyback operations from September 9 through November 4.
The New Zealand dollar rose sharply against the US dollar on Wednesday, with NZD/USD trading around 0.5930, up 0.96% on the day, according to FXStreet. The move was driven primarily by broad weakness in the US dollar as falling US Treasury yields reduced the appeal of USD-denominated assets.
FXStreet noted that the US 10-year Treasury yield fell to 4.651% after reaching 4.712% earlier in the day. The decline followed a US Treasury plan to double the size of some buyback operations intended to support liquidity in longer-dated securities, increasing nominal coupon buybacks in the 10-year to 20-year and 20-year to 30-year sectors from $2 billion to at least $4 billion per operation between September 9 and November 4.
The dollar slide also showed up in the US Dollar Index (DXY), which fell 0.81% to around 98.85, its lowest level since May 29. FXStreet said investors were looking ahead to the latest Federal Open Market Committee minutes and to Wednesday’s US 20-year Treasury bond auction.
On the New Zealand side, FXStreet cited support from the Reserve Bank of New Zealand’s hawkish stance, including the central bank’s emphasis on withdrawing some monetary policy support. It framed the NZ advance as happening alongside the simultaneous drop in US yields and the dollar.
Latest closeDollar index 99.64 ▼0.3%