August OCR Hike Fully Priced In

NZD/USD trimmed gains after it initially went through the roof in Wednesday's Asia-Pac session. Central bank repricing was in the driving seat, with the initial upswing driven by participants betting for a steeper RBNZ tightening cycle, as New Zealand's jobs data overshot expectations. The greenback received a boost later in the day, as Fed Vice Chair Clarida suggested that the FOMC could begin to raise interest rates in early 2023. A beat in ISM Services Index lent further support to the USD. NZD/USD showed above its 50-DMA for the first time since mid-Jun, before pulling back below that moving average.

• The OIS strip now fully prices a 25bp OCR hike in August, while some sell-side desks have flagged a risk of the Reserve Bank raising its benchmark interest rate by 50bp at the next meeting.
• The RBNZ said in a report for Parliament's Finance Expenditure Committee that its property price forecasts have consistently missed reality over the last 10 years, by 5.2pp on average.
• Westpac revised their 2021/22 farmgate milk price forecast to NZ$7.75/kg from NZ$8.00, after dairy prices fell for the eighth time in a row at the latest GDT auction.
• ANZ Commodity Price Index, due later today, is the only NZ release during the remainder of this week.
• NZD/USD trades at $0.7043 at typing, 5 pips lower on the day. Losses past Aug 2 low of $0.6953 would shift focus to Jul 28 low of $0.6902. Meanwhile, a move through yesterday's peak at $0.7089 would bring Jul 6 high of $0.7105 into view.