Kiwi Bolstered By Strong Inflation Print, Greenback Remains On Back Foot

The kiwi dollar has caught a bid (albeit in a gradual manner) after the release of New Zealand's Q2 CPI report, with headline inflation quickening to +7.3% Y/Y, the strongest pace in 32 years. Prices grew faster than expected by analysts polled by Bloomberg (median est. +7.1% Y/Y) and surpassed the projection in the RBNZ's May Monetary Policy Statement (+7.0% Y/Y). New Zealand's central bank will publish its preferred gauge of core inflation later in the day, providing further insights on underlying price dynamics.

• The data provoked slight hawkish repricing of RBNZ tightening, while NZ 2-year swaps climbed to their highest point this month. In terms of sell-side response, ANZ revised its terminal OCR level call to 4.0% from 3.5%. The bank added that "a 75bp hike at the August MPS is a very real possibility."
• NZD/USD ran as high as to $0.6192, but has shied away from testing the $0.6200 mark. Implied volatilities rose across the curve, with 1-month tenor (it now covers the next RBNZ rate review) grinding to best levels since last Wednesday.
• The greenback sits at the bottom of the G10 pile as the region digester Friday's Fedspeak/data out of the U.S. which reduced expectations of a full-percentage point hike at the next FOMC meeting. E-mini futures remain in positive territory, as sentiment remains relatively buoyant.
• Japanese financial markets are closed in observance of a public holiday, limiting liquidity in the local timezone.
• The global data docket will remain rather light after Asia hours. BoE's Saunders is the only G10 central bank member due to speak.