NZD/USD May Fall on Technical Signal as APAC Markets Look for

New Zealand Dollar, NZD/USD, Stimulus, Treasury Yields – Talking Points

• US Stocks move higher as Treasury yields ease before Chair Powell, Secretary Yellen speak Tuesday
• A sparse economic calendar likely will leave markets at the mercy of broader risk trends
• NZD/USD could continue to move lower in the near-term with a bearish technical signal on the horizon

US stock markets started off the week on a solid footing as Treasures caught a bid, pushing yields lower across the curve. Technology companies were the biggest beneficiaries, with the Nasdaq 100 rising a healthy 1.71% on the day. The S&P 500 and Dow Jones Industrial Average (DJIA) also saw inflows, closing 0.70% and 0.32% higher, respectively.

Elsewhere, gold and silver prices fell against a strengthening Greenback. The US Dollar’s move higher was an extension from Friday when the Federal Reserve announced its decision not to extend the Supplementary Leverage Ratio (SLR). The regulatory measure was initially intended to ease stress on the Treasury market. However, the Fed’s statement noted that stress has since eased. Even so, further action may be necessary according to the Federal Reserve, with the central bank stating:

“Since that time, the Treasury market has stabilized. However, because of recent growth in the supply of central bank reserves and the issuance of Treasury securities, the Board may need to address the current design and calibration of the SLR over time to prevent strains from developing that could both constrain economic growth and undermine financial stability.”

The SLR issue may be brought up at this week’s congressional hearing when Chair Powell and Treasury Secretary Janet Yellen will appear and speak together for the first time since Ms. Yellen took the helm at the Treasury Department. Regardless, traders and investors will continue to monitor any updates on further changes to the SLR.

Nasdaq 100, 10-Year Treasury Yield – 30 Minute Chart

Chart created with TradingView

Tuesday’s Asia-Pacific Outlook

Monday’s upbeat performance on Wall Street may help lift Asia Pacific equity markets after getting off to a rough start on Monday. Hong Kong’s Hang Seng Index (HSI) dropped 0.36% while mainland China’s CSI 300 outperformed, with a 1.00% gain. South Korea’s KOSPI inched 0.13% lower, and Australia’s ASX 200 managed to record a 0.66% gain.

Elsewhere, Japan’s Nikkei 225 suffered a deep loss after a major fire at an…