Countdown Is On Ahead Of RBNZ MPS

The kiwi is off to a quiet start, with participants looking ahead to Wednesday's monetary policy meeting of the RBNZ. NZD/USD trades unchanged at $0.7041 after adding 32 pips last week.

• The upcoming RBNZ gathering is deemed "live," with most analysts surveyed by BBG looking for a 25bp OCR hike. The OIS strip currently prices 28bp worth of tightening this week and some sell-side desks have flagged a hawkish risk of a double-barrel 50bp hike.
• The RBNZ's Q3 Survey of Expectations released last week showed that 2-year inflation expectations rose to +2.27% Y/Y, the highest level in three years.
• Meanwhile, New Zealand's PSI released this morning deteriorated a tad to 57.9 in July from 58.4 recorded in June. The accompanying commentary from BNZ flagged mounting inflation pressure, with the Bank seeing evidence that "the likes of annual CPI inflation will push materially higher over coming quarters".
• From a technical point of view, bulls look for a rally past Aug 11 high of $0.7062, before taking aim at $0.7089, which capped gains on Aug 4. The downside focus falls on Aug 10 low of $0.6969 and a break here would bring Aug 2 low of $0.6953 into play.
• On a different front, PM Ardern refused to rule our sending NZ troops to repatriate New Zealanders trapped in Afghanistan.