Hawkish RBNZ Posture Boosts Kiwi

The kiwi leapt higher, taking the lead in G10 FX space, as the RBNZ raised the OCR by 25bp and forecast more aggressive interest-rate action for the period ahead. The MPC now expect their policy rate to rise faster and peak at a higher point, with balance sheet runoff officially set to commence through a combination of bond maturities and managed sales. The statement highlighted that the decision to hike the OCR by 25bp rather than 50bp was "finely balanced," while the Committee was "willing to move the OCR in larger increments if required," underscoring the Reserve Bank's resolve in delivering bold policy response amid soaring inflation.

• While AUD has drawn some very limited support from developments across the Tasman, the earlier marginal miss in Australian wage price index has kept a lid on resultant gains. Worth noting that RBA rate hike bets were trimmed after the release. AUD/NZD has surged to its best levels in two weeks, topping out just shy of its 50-DMA, which has been intact since early December.
• The U.S. dollar underperforms all of its G10 peers, with U.S. e-minis still operating in the green as participants assess geopolitical developments/market implications of Western sanctions against Russia. Greenback weakness has allowed USD/JPY to descend onto the Y115.00 figure, with Japanese markets shut in observance of a public holiday.
• Spot USD/CNH has popped higher despite a firmer than expected PBOC fix. China's central bank set the USD/CNY reference rate 17 pips below sell-side estimate.
• While geopolitical risk will likely continue to draw attention today, remaining data highlights include final EZ CPI & German consumer confidence. A post-MonPol presser with RBNZ Gov Orr will get under way at the top of the hour, with Fed's Daly, ECB's de Guindos, de Cos & Villeroy and BoE's Bailey, Broadbent, Haskel & Tenreyro due to speak later in the day.