FX.co ★ New Zealand Dollar Holds Firm

The New Zealand dollar held near $0.593 after gaining 1% in the previous session to reach a two-and-a-half-month high, supported by a weaker US dollar and a pullback in US Treasury yields from multi-year peaks. The US Treasury said it would double its buybacks of longer-dated government debt in an effort to improve market liquidity and stabilize the bond market. The resulting decline in US yields eased pressure on risk-sensitive currencies, even as uncertainty over the Middle East conflict persisted.

At the same time, minutes from the Federal Reserve’s July meeting indicated that policymakers remained concerned about stubborn inflation, with several officials willing to consider additional interest-rate increases. That stance could lend some support to the greenback and cap further gains in the kiwi. Even so, the New Zealand dollar continues to draw support from expectations that the Reserve Bank of New Zealand will deliver another rate hike in September.