Inflation Expectations At The Fore Thursday

NZD/USD went bid Thursday as the benchmark indicator of New Zealand's inflation expectations reached a 10-year high, fuelling expectations that the RBNZ will need to follow a steeper tightening path.

• The OIS strip now prices ~36bp worth of tightening at the Reserve Bank's final monetary policy meeting this year, slated for next Wednesday. In addition, market pricing suggests that the OCR would reach a "neutral" level of 2% come the end of the August 2022 meeting.
• NZD/USD 1-week implied volatility remains elevated ahead of next week's MPC gathering. It last sits at 10.12%, not too far from its best levels this month (10.85%).
• Spot NZD/USD trades flat at $0.7043. A move through Nov 15 high of $0.7081 would bring the 200-DMA at $0.7093 into view. Conversely, a pullback under Nov 17 low of $0.6980 would give bears some fresh impetus.
• PM Ardern told reporters this morning that the Ministry of Health will provide more information on a new Wellington cast of Covid-19 at the regular press conference today, adding that the Cabinet have not yet made any decisions on further movement in Covid Alert Levels.
• New Zealand's credit card spending will be released later today. Next week's data highlights include retail sales (Monday), trade balance (Thursday) & ANZ Consumer Confidence (Friday).