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Further Hawkish RBNZ Repricing Aids Kiwi, Japanese FinMin Vows To Boost Market Monitoring

FOREX

Gains for U.S. e-mini futures and a firmer commodity complex buoyed high-beta currencies in the Asia-Pac session, with the Antipodeans pacing gains. Hawkish RBNZ repricing continued after the release of New Zealand's strong consumer inflation data on Tuesday, with little in the way of fresh headline catalysts trickling through today. Meeting-dated OIS price ~82bp worth of OCR hikes for the final meeting of 2022, with the 12bp upswing from the opening levels doubling the total post-CPI advance.

  • AUD/NZD traded on a heavier footing but struggled to test yesterday's lows, as a move higher in the BBG Commodity Index lent support to the Aussie dollar. Relative interest rate dynamics remained skewed in favour of the kiwi, as Australia/New Zealand 2-year swap spread refreshed multi-month lows.
  • Yen watchers were on alert for signs of an FX intervention by Japanese officials, after a sudden bout of purchases resulted in a sudden 110-pips downswing in USD/JPY on Tuesday, inspiring speculation on potential stealth action. Officials resumed jawboning, with FinMin Suzuki pledging to increase the frequency of detailed checks on market moves.
  • The Asia-Pac section of G10 FX basket generally outperformed European peers, albeit sterling traded on a firmer footing. The BBDXY index ground higher alongside cash U.S. Tsy yields.
  • Inflation data from the UK, Eurozone and Canada take focus from here, alongside U.S. housing starts and building permits. There is plenty of central bank speak coming up from Fed, ECB, BoE and Riksbank officials.
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Gains for U.S. e-mini futures and a firmer commodity complex buoyed high-beta currencies in the Asia-Pac session, with the Antipodeans pacing gains. Hawkish RBNZ repricing continued after the release of New Zealand's strong consumer inflation data on Tuesday, with little in the way of fresh headline catalysts trickling through today. Meeting-dated OIS price ~82bp worth of OCR hikes for the final meeting of 2022, with the 12bp upswing from the opening levels doubling the total post-CPI advance.

  • AUD/NZD traded on a heavier footing but struggled to test yesterday's lows, as a move higher in the BBG Commodity Index lent support to the Aussie dollar. Relative interest rate dynamics remained skewed in favour of the kiwi, as Australia/New Zealand 2-year swap spread refreshed multi-month lows.
  • Yen watchers were on alert for signs of an FX intervention by Japanese officials, after a sudden bout of purchases resulted in a sudden 110-pips downswing in USD/JPY on Tuesday, inspiring speculation on potential stealth action. Officials resumed jawboning, with FinMin Suzuki pledging to increase the frequency of detailed checks on market moves.
  • The Asia-Pac section of G10 FX basket generally outperformed European peers, albeit sterling traded on a firmer footing. The BBDXY index ground higher alongside cash U.S. Tsy yields.
  • Inflation data from the UK, Eurozone and Canada take focus from here, alongside U.S. housing starts and building permits. There is plenty of central bank speak coming up from Fed, ECB, BoE and Riksbank officials.