- The spread between the 10-year New Zealand government bond yield and its US counterpart continues to slide in the NZD-negative manner, courtesy of dovish RBNZ expectations.
- The NZD/USD pair is down for the fifth day straight day and could remain offered ahead of tomorrow’s RBNZ rate decision.
The NZD remains offered for the fifth day straight, possibly due to the narrowing NZ-US yield differentials.
The spread between the 10-year New Zealand government bond yield and its US counterpart is currently seen at -0.549 basis points, the lowest level since early November and down significantly from the high of -0.233 basis points seen on Jan. 3.
Put simply, the benchmark New Zealand government bond now yields 54.9 basis points less than the US 10-year treasury note, which means there is little incentive to hold the NZD.
The narrowing yield spread could be associated with the dovish RBNZ expectations. New Zealand’s central bank is widely expected to keep interest rates unchanged tomorrow and adopt a dovish tone.
NZD/USD pivot points
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