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Kiwi Catches Light Bid After RBNZ Underscores Tightening Bias

NZD

The kiwi dollar took the lead in G10 FX space after the RBNZ announced its monetary policy review, but has already given away the bulk of those gains.

  • New Zealand's central bank raised the OCR by the expected 50bp while signalling continued hawkish bias. The statement underscored the Reserve Bank's focus on bringing inflation under control, while the peak of the OCR track was reset higher.
  • NZD/USD popped higher in the initial reaction, running as high as to $0.6383 and having a look above yesterday's high. The pair has now trimmed gains and last deals at $0.6352, up 6 pips on the day, with familiar technical levels in play.
  • NZGB yield curve has bear flattened as the short-end leads cheapening impetus. When this is being typed, yields sit 4.8-8.5bp higher. The 2-year/10-year segment has moved deeper into inversion territory as the prospect of continued aggressive RBNZ tightening increases the risk of a hard landing for the economy.
  • The OIS strip almost fully prices (implied ~96% chance) another 50bp rate hike come the end of the next MPC meeting in October.
  • Reminder that RBNZ Gov Orr is beginning his press conference. He will also testify to a parliamentary committee tomorrow morning.
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The kiwi dollar took the lead in G10 FX space after the RBNZ announced its monetary policy review, but has already given away the bulk of those gains.

  • New Zealand's central bank raised the OCR by the expected 50bp while signalling continued hawkish bias. The statement underscored the Reserve Bank's focus on bringing inflation under control, while the peak of the OCR track was reset higher.
  • NZD/USD popped higher in the initial reaction, running as high as to $0.6383 and having a look above yesterday's high. The pair has now trimmed gains and last deals at $0.6352, up 6 pips on the day, with familiar technical levels in play.
  • NZGB yield curve has bear flattened as the short-end leads cheapening impetus. When this is being typed, yields sit 4.8-8.5bp higher. The 2-year/10-year segment has moved deeper into inversion territory as the prospect of continued aggressive RBNZ tightening increases the risk of a hard landing for the economy.
  • The OIS strip almost fully prices (implied ~96% chance) another 50bp rate hike come the end of the next MPC meeting in October.
  • Reminder that RBNZ Gov Orr is beginning his press conference. He will also testify to a parliamentary committee tomorrow morning.