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Trading news
26 Sep 2017
NZD/USD spot and 10-year bond yield differential diverge
The sell-off in the NZD/USD appears to have stalled at the 100-DMA support of 0.7237. The pair topped out at a high of 0.7434 on September 20.
The sell-off from 0.7434 to 0.7237 contradicts the resilience in the NZ-US 10-year bond yield spread.
The spread currently stands at 80.4 basis points; its monthly high. The divergence indicates-
- A potential bear trap in the NZD/USD or
- Bull trap in the US 10-year treasury [i.e. 10-year yield could rise relatively faster than its New Zealand counterpart during the days ahead].