NZD Steadies as Soft US Bond Yields Defy Dollar Strength
The New Zealand Dollar (NZD) has steadied in recent trading sessions as softer US bond yields keep the US Dollar (USD) on the defensive. The Reserve Bank of New Zealand's (RBNZ) cautious stance is seen as a key factor behind the NZD's relative underperformance, despite a better-than-expected domestic GDP report published on Thursday.
The USD struggles to lure buyers as US bond yields retreat further from multi-year highs amid receding fears of runaway inflation due to a modest pullback in crude oil prices. However, the Federal Reserve's (Fed) hawkish outlook, including their decision to raise interest rates for the first time in over three years at the conclusion of the September meeting on Wednesday, continues to support the USD.
Despite this, traders are cautious about placing aggressive bets due to the combination of diverging forces holding back bearish traders. The NZD/USD pair is expected to remain under pressure, particularly with spot prices on track to register heavy losses for the fourth straight week.