Kiwi Claws Back Losses, Charting Dragonfly Doji

Tuesday was a session of two halves for NZD/USD. Greenback strength weighed on the pair in Asia & Europe, despite a hawkish surprise provided by the RBA across the Tasman, who raised their cash rate target by 50bp. The rate faltered to $0.6423 (support from May 24 & 25 lows) but then recovered in NY hours as a slide in U.S. Tsy yields prompted initial USD strength to dissipate. This led to the formation of a dragonfly Doji candlestick.

• The kiwi's failure to appreciate on the back of RBA monetary policy decision may have been linked to AUD/NZD purchases after the announcement, which took the cross to four-year highs.
• ANZ Commodity Price Index fell 2.8% M/M in May, with dairy prices down 4.8% M/M. But GDT Price Index rose 1.5% at the latest auction, as per results published after NZ hours, snapping a losing streak lasting five auctions, even as whole milk powder prices edged 0.3% lower.
• FinMin Robertson noted that Labour has not set tax policies for 2023 election yet but there is scope for the tax system to be more progressive. He added that supply chain problems are expected to persist into next year and insisted that the budget did not exacerbate inflationary pressures.
• NZD/USD deals at $0.6486 at typing. The key near-term layer of support has been defined at $0.6423 and a break here would clear the way to May 18 low of $0.6291. Bulls look for a rebound above Jun 3 high of $0.6576, followed by the $0.6600 mark.