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  • NZD/USD looks to close second straight day in the positive territory.
  • Surging US Treasury bond yields helped USD recover modestly.
  • S&P 500 touched a new all-time high on Wednesday.

The NZD/USD pair advanced to its highest level since April 2018 at 0.7316 on Wednesday but erased a small portion of its daily gains during the American trading hours. As of writing, the pair was up 0.5% on the day at 0.7288.

DXY rebounds on soaring US T-bond yields

Earlier in the day, the risk-on market environment, as reflected by rising European equity indexes, made it difficult for the greenback to attract investors as a safe-haven. The US Dollar Index (DXY) slumped to a fresh multi-year low of 89.20 during the European trading hours.

In the second half of the day, however, the DXY turned north supported by surging US Treasury bond yields. Prospects for additional stimulus with Democrats looking to claim the majority in the Senate after the runoff election in Georgia provided a boost to T-bond yields. At the moment, the benchmark 10-year reference is at its highest level since March, rising more than 9% at 1.047% and the DXY is up 0.15% at 89.56.

The data from the US showed that employment in the private sector declined by 123,000 in December. Nevertheless, this disappointing reading had little to no impact on market sentiment. In fact, the S&P 500 Index notched a new all-time high at 3,775 in the last hour.

Later in the session, the FOMC will publish the Minutes of its December meeting. There won’t be any macroeconomic data releases from New Zealand on Thursday.

Technical levels to watch for