AUD and NZD Tumble as US Yields Rise, Despite Expected Rate Hikes
The Australian and New Zealand dollars experienced a significant decline this week as US Treasury yields rose and the US dollar strengthened. Despite expectations of further rate hikes from both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ), the Aussie and Kiwi currencies fell under pressure.
According to Finimize, the Aussie ended the week down 1.6% at $0.7010 after touching a seven-week low, while the kiwi fell for a fifth straight week to $0.5659, near widely watched support levels.
The reason behind this trend is attributed to the more hawkish Federal Reserve, which has pushed investors to price in another hike and a higher peak for US rates. As US yields rise, global investors are drawn to USD assets as they can earn more interest without taking on currency risk elsewhere.