NZD Rebounds Amid Election Uncertainty and Hawkish Fed

The New Zealand Dollar (NZD) has made a slight recovery to near 0.5610, snapping its three-day losing streak in the early European session on Friday. However, this potential upside may be limited due to rising US Treasury yields and a hawkish stance from the Federal Reserve (Fed), which supports the US Dollar against the NZD.

The 10-year US Treasury yield reached 5.34% earlier in the week, its highest since 2002, before retreating to 5.25%. The 30-year Treasury bond yield also hit levels not seen in 24 years before moderating.

Dallas Fed President Lorie Logan stated that the central bank will need to raise short-term borrowing costs by at least 50 basis points (bps) to turn monetary policy 'modestly restrictive' and get inflation back on track to the Fed's 2% target.

The US jobs report for September, featuring a forecast of 90,000 new Nonfarm Payrolls after an increase of 162,000 in August, will be the highlight later today. The Unemployment Rate is expected to remain at 4.1% for the third consecutive month.