On Thursday, the US dollar experienced a widespread decline, mirroring the drop in US Treasury yields. This came as markets increasingly believed that the Federal Reserve had concluded its aggressive cycle of monetary policy tightening, following their decision to leave interest rates unchanged.

The Fed's choice to maintain interest rates, as anticipated, stemmed from their ongoing assessment of whether financial conditions were adequately restrictive to combat inflation, as reported by Reuters. However, Federal Reserve Chair Jerome Powell acknowledged that the recent market-driven increases in Treasury bond yields, home mortgage rates, and other financing costs could have their own impact on the economy if they persist.

This decision had a positive effect on Wall Street sentiment, which spilled over into Asian markets and gave a slight boost to the risk-sensitive Australian and New Zealand dollars. The Australian dollar saw a 0.5% increase, reaching a three-week high of $0.6426, while the New Zealand dollar similarly surged by more than 0.5% to hit a two-week peak of $0.58825.

Simultaneously, the US dollar experienced a broad decline alongside US Treasury yields, which reached multi-week lows in early Asian trading.