Kiwi Becomes Collateral Damage Of Another Salvo Against Housing Market Bubble

Despite grinding higher for the better part of Monday, NZD/USD dived into the close, extending losses in early Asia-Pac trade, after New Zealand's government unveiled measures to crack down on the relentless housing market boom.

• The suite of measures announced by PM Ardern included the removal of tax incentives for investors in a bid to curb speculation, with the PM noting that "property investors are now the biggest share of buyers." In addition, the gov't announced extending the "bright-line" test (an effective capital gains tax on investment property) from 5 to 10 years, for properties bought from Mar 27.
• Opposition leader Collins accused FinMin Robertson of lying, while Robertson responded that he may have been "too definitive" when he ruled out tweaking the bright-line test before the general election.
• Other steps announced by the gov't included raising price and income caps on First Home Grant & First Home Loan and earmarking NZ$3.8bn for the Housing Acceleration Fund for the infrastructure around housing developments.
• Furthermore, the gov't mulls implementing debt-to-income ratio restrictions and restrictions on interest-only mortgages and expects the RBNZ to report back on these proposals in May.
• Elsewhere, New Zealand and Australia said they "welcome" sanctions imposed against against China by the U.S., UK, EU & Canada, but stopped short of implementing their own sanctions.
• NZD/USD has shed 33 pips so far and last sits at $0.7130, after bottoming out at $0.7124. The 100-DMA at $0.7125 provides the initial layer of support and a clean break here would open up Mar 5 low of $0.7100. Bulls look for a rally above Mar 18 high of $0.7269, towards Mar 2 high of $0.7307.
• New Zealand's credit card spending headlines the local docket today. Looking further afield, focus turns to trade balance, due Wednesday.