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New Zealand, Canadian Dollars Hit 2-Year Lows

US treasury yields continue to break to new multi-year highs, while certain commodity currencies weaken to new lows.

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  1. Although stock markets and risky assets mostly made a small recovery over the past day, US treasury yields have continued to rise, with both the 2-year and the 10-year yields reaching new multi-year highs. The 2-year treasury yield traded very close to the 4% level.
  2. In the Forex market, the US Dollar lost a little ground, but remains well within a valid long-term bullish trend. The most interesting currencies right now are the very weak New Zealand and Canadian Dollars, which fell to new multi-year lows yesterday against the greenback. The NZD/USD currency pair reached a low of $0.5929 which the USD/CAD currency pair hit $1.3308.
  3. Markets are keenly awaiting tomorrow’s release from the Federal Reserve, as analysts are leaning more strongly towards an expectation of a 0.75% rate hike rather than a full 1%. This expectation, and its fulfilment, might lead to a weakening in the USD and in its 2-year treasury yield.
  4. Japan’s core consumer CPI (inflation) data reached 2.8%, well above the Bank’s 2% inflation target. However, the Bank feels unable to raise rates as the economy remains weak but will be subject to further and undesired depreciation in the Yen unless it does so.
  5. Bitcoin has recovered to trade back above the key support at $19,091 after making a strong bearish breakdown yesterday.
  6. The Reserve Bank of Australia released its Monetary Policy Meeting Minutes, which suggested a slowing pace of rate hikes which the minutes stated had reached close to a “normal” level.
  7. There will be a release of Canadian CPI data later today.
  8. Daily new coronavirus cases globally dropped last week for the ninth consecutive week, giving rise to the hope that the pandemic is finally over in any meaningful sense. Yesterday President Biden declared the pandemic “over”.
  9. It is estimated that 67.9% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.8% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.  
  10. Total confirmed new coronavirus cases worldwide stand at over 617.6 million with an average case fatality rate of 1.06%.  
  11. The rate of new coronavirus infections appears to now be significantly increasing only in Taiwan and Russia.  
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