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NZD/USD lifts above 0.5930 as US long-end yields retreat
The NZ Treasury plans to increase longer-dated coupon buybacks, helping push the US 10-year yield back toward 4.65% after trading above 4.70%.
The New Zealand dollar strengthened versus the US dollar, pushing NZD/USD above 0.5930, with the move attributed to broad US dollar weakness rather than any specific catalyst from New Zealand, according to FXStreet. FXStreet said the initial trigger came from US Treasury buyback plans. The US Treasury Department intends to at least double its buyback operations for longer-dated coupon securities in the 10-year to 20-year and 20-year to 30-year buckets, raising each operation from $2 billion to at least $4 billion between September 9 and November 4, aiming to support liquidity and limit the recent rise in long-end yields. The impact was visible quickly, with the US 10-year yield falling back toward 4.65% after trading above 4.70% earlier in the day. FXStreet also noted that July FOMC minutes released on Wednesday did little to change the overall rate outlook, with inflation still viewed as elevated and three officials voting for a hike, while traders treated the details as largely backward-looking given softer inflation and weak jobs data since the meeting. Looking ahead, FXStreet said NZD/USD direction still depends more on the US yield and dollar path than on New Zealand developments, even as it flagged Thursday's New Zealand July trade balance as an item to watch. On its technical read, the pair was at 0.5932 on the 4-hour chart, holding above its 20-period and 100-period moving averages, with resistance near 0.5935 and 0.5939 and support around 0.5929 and 0.5922.