U.S. benchmark 10-year yields hit a high of 3.128 per cent in early Asian trade on Friday, the highest since July 2011, on growing optimism about the US economy and expectations that the US Federal Reserve will raise interest rates at least two more times this year.
The US 10-year bond yield has lifted around 15 basis points this week putting it on track for its largest weekly gain in three months, according to Reuters. The kiwi, on the other hand, continues to be weighted down by the prospect of interest rates staying at record low levels at least until late 2019 or early 2020.
Tim Kelleher, head of institutional foreign exchange sales at ASB Bank, said the kiwi has solid resistance around 67.80 US cents to 68.25 US cents and "I would have thought it will have trouble getting through there at least on the first attempts," he said.
He said the kiwi is finding some support on exporter buying "which isn't surprising given that it's around five-month lows." The local dollar last traded at these levels in December 2017.
Given a dearth of domestic and international data on the immediate horizon, Kelleher said the kiwi will be pushed around by offshore sentiment, in particular around the US-China trade talks.
The kiwi traded at 91.63 Australian cents from 91.61 cents yesterday. The kiwi dollar traded at 4.3840 yuan from 4.3907 yuan. It was largely unchanged at 50.96 British pence from 50.97 pence and slid to 58.32 euro cents from 58.40 cents. The kiwi traded at 76.34 yen from 76.14 yen.
New Zealand's two-year swap rate was unchanged at 2.22 per cent while 10-year swaps lifted 3 basis points to 3.27 per cent.
