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Kiwi Catches Bid As RBNZ Core Inflation Gauge Rises Past Target Range Midpoint

NZD

The kiwi received a fresh tailwind as the RBNZ released their sectoral factor model of core inflation. Annual core inflation accelerated to +2.2% in Q2 from +2.0% in Q1, rising past the mid-point of the Reserve Bank's target range. This comes after headline CPI released this morning not only topped market expectations, but also broke above the upper end of the RBNZ's target range.

  • After easing off post-CPI highs, NZD/USD regained poise and last trades +32 pips at $0.7015. AUD/NZD trades -38 pips at NZ$1.0597, after mimicking the move in NZD/USD.
  • The OIS strip prices in a ~91% chance of a 25bp hike in August as we type, with 50bp worth of tightening by the end of this year now fully priced in.

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