New Zealand, Australian Dollars Show Sharp Declines

Forex markets ranged overnight, as a slight drop in US yields prompted the US dollar index to shrink by 0.19% to 91.75. Amid the easing of Asian equity markets, the index recouped nearly all of the overnight losses. Thus, the index has drifted in the middle of its one-week range.

The New Zealand dollar has been the primary mover in Asia today and the government announced measures to control New Zealand’s rampant property market. Consequently, NZD/USD fell by 1.05% today to 0.7085. 

Recently, both the AUD/USD and NZD/USD pairs have had persistent downside risks. The NZD/USD pair has declined through critical support at 0.7100. Moreover, a daily close below 0.7100 targets more losses to 0.6900 in the sessions ahead.

Dragging AUD/USD 0.65% lower to 0.7700, another important support level, was the severe flooding in New South Wales and Queensland, combined with a flailing kiwi. This risks further losses to 0.7600 and possibly to as far as 0.7400 ahead. 

For two weeks now, the Antipodeans were sensitive. A rise in US yields in the coming days will likely lead movements lower.

Asian Forex

Asian regional currencies’ movements have remained modest as well. They have edged lower against the US dollar today by between 0.10% and 0.20%. 

The Indian rupee held firm, aided by falling oil imports. However, selling pressures may emerge if their Covid-19 resurgence intensifies. The rupee, Indonesian rupiah, and Philippine peso are the most vulnerable of the region’s currencies affected by the sharp rise in US yields.

Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen will testify before a House committee. With that, the Fed will be in focus today, as  Four Fed governors will deliver their speeches on interest rates. 

Dollar Strengthens Ahead of Testimony

On Tuesday, the dollar strengthened in early European forex trading. The spotlight turned towards testimony from Fed chief Jerome Powell and Treasury Secretary Janet Yellen. Investors were eager for clues as to what this may mean for bond yields. 

The Dollar Index added 0.2% at 91.877 at 2:55 AM ET (0655 GMT), just below recent highs.

USD/JPY fell 0.1% at 108.69 and EUR/USD dropped 0.1% to 1.1925. These losses came after Germany extended its lockdown until April 18. Germany is the euro zone’s largest country.

Moreover, GBP/USD dipped 0.2% to 1.3833.

This month,the greenback has appreciated some 2%. It was partly boosted by rises in the U.S. Treasury yields.