NZD Rallies as Falling US Yields Weigh on Dollar

The New Zealand Dollar (NZD) surged against the US Dollar (USD) on Wednesday, reaching its highest level in months. The NZD/USD pair traded around 0.5930 at the time of writing, a 0.96% increase from the previous day.

This sharp rise in the NZD is largely attributed to the decline in US Treasury yields, which has reduced the appeal of the Greenback. The US 10-year Treasury yield fell to 4.651% after reaching 4.712% earlier in the day.

The move follows a surprise announcement from the United States Department of the Treasury, which plans to double the size of some buyback operations aimed at supporting liquidity in longer-dated securities. The US Treasury will increase the size of buybacks of nominal coupon securities in the 10-year to 20-year and 20-year to 30-year sectors from $2 billion to at least $4 billion per operation between September 9 and November 4.

The drop in US yields has weighed directly on the Greenback, causing the US Dollar Index (DXY) to fall 0.81% on Wednesday and trade around 98.85, its lowest level since May 29.