Antipodeans Grind Lower, RBNZ Stoke Some NZD Volatility

The RBNZ triggered some NZD volatility as policymakers raised the OCR by 25bp (in line with expectations), pointed to elevated capacity pressures and reaffirmed their view that further withdrawal of stimulus is in sight. The kiwi blipped higher in the initial reaction but promptly shed gains and retreated towards fresh session lows.

• NZD/USD topped out at $0.6979 before staging a pullback, but the $0.6928/27 area, which limited losses earlier this week, proved resilient. Looking ahead, as much as NZ$2.2bn worth of NZD/USD options with strikes at $0.7000 will roll off at today's NY cut.
• Post-RBNZ volatility briefly interrupted the Antipodeans' general depreciation driven by broader risk-off feel. Equity benchmarks across the Asia-Pac region reversed early gains and retreated alongside U.S. e-mini futures.
• The greenback firmed against G10 currencies and the DXY crossed above yesterday's highs amid an uptick in U.S. Tsy yields.
• Onshore Chinese markets remained closed in observance of a week-long national holiday.
• Today's data highlights include German factory orders, EZ retail sales & U.S. ADP employment change. Speeches are due from ECB's Centeno & Riksbank's Skingsley.