New Zealand Dollar Plunged to a Three-Week Low on Wednesday

373
economy and dollar, stock market

The New Zealand dollar collapsed to a three-week low in Asian trading at $0.6564, on Wednesday. Auckland resumed lockdowns as four new coronavirus cases were detected after 102 virus-free days. Analysts were waiting for a crucial central bank policy decision, which was due later on Wednesday. However, they haven’t expected any change in rates as a dovish tone was more likely considering circumstances.

 

Meanwhile, the U.S. dollar continued rallying against a basket of currencies, trading at 93.654 at last. The greenback surged forward on Wednesday after finding support. U.S. yields soared, pushing the U.S. currency higher against the Japanese yen. Traders are betting on a broader and deeper U.S. coronavirus recovery.

 

After a long downfall, the dollar started gaining last Friday as U.S.-China tensions rose higher. President Donald Trump banned Chinese apps – WeChat and TikTok, causing more turmoil in the markets.

 

Against the Euro, the greenback was steady at $1.1740. It was also firm versus the Australian dollar, trading just below a one-week high at $0.7147.

 

So far, the dollar index plummeted down by 9% from the three-year high it hit in March. The currency declined by 4% in July alone. Investors argue over whether the support the greenback has found in August amounts to a gain or a pause in its decline.

 

What Do Analysts Think?

 

Rodrigo Catril, the NAB senior FX strategist, stated that the surge in yields is driven by both repositioning ahead of big issuance this week and a sense that the U.S. rebound is broadening. According to him, the Dollar/Yen pair is very sensitive. It may cause higher U.S. Treasury yields to be broadly supportive of the dollar.

 

Meanwhile, the yield on 10-year U.S. debt made its steepest gain in two months overnight. As a result, the greenback increased by 0.5% against the Japanese yen to 106.53. But traders are still focused on the political holdup in Washington over a new stimulus package.

 

  • Support
  • Platform
  • Spreads
  • Trading Instument

For more news updates, visit our homepage now and see our latest news article. Want to learn more about trading? Visit our education page now and learn for FREE!

Tags:

Leave a Reply

Sending