NZD/USD turns a blind eye towards breakdown in NZ/US yield differential
|- 10Y NZ-US yield spread has turned negative.
- Kiwi reports marginal losses but trades well above the previous day's low of 0.7196.
The spread between the New Zealand and US 10-year government bond yields has turned negative for the first time since records began in the mid-1990s.
However, the Kiwi is showing little signs of stress. As of writing, it is trading at 0.7235 - down 0.10 percent and well above the previous day's high of 0.7196. Kiwi's resilience is not surprising, given the traditional FX market correlations have not worked since Q4, 2017.
That said, the spread may drop further in the NZD-negative manner if the Fed revises higher it's 2019 and 2020 dot plot this Wednesday.
NZD/USD Technical Levels
A move above 0.7275 (21-day moving average) would expose 0.7355 (March 13 high). A close higher would signal a bearish-to-bullish trend change and allow a stronger rally to0.7437 (Feb. 16 high). On the downside, breach of support at 0.72 (psychological support) could yield a sell-off to 0.7184 (200-day MA) and 0.7176 (Feb. 8 low).
10-year yield spread
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.