Kiwi Consolidates Post-CPI Gains

NZD happy to consolidate gains seen in reaction to a stronger than expected NZ quarterly CPI report (see the earlier NZD bullet for details). RBNZ Gov Orr spoke on the Reserve Bank's investigation into the recent data breach, noting that its cause is not understood and resolved.

• AUD/NZD trades -10 pips at NZ$1.0751, testing session low & the worst level since Jan 13. Losses past the 200-DMA at NZ$1.0721 would allow bears to target the 100-DMA/psychological support at NZ$1.0702/00. On the topside, focus falls on Jan 19 high of NZ$1.0843, a key near-term resistance.
  • Australian retail sales shrank more than expected in December, per preliminary data. They fell 4.2% M/M vs. exp. of a 1.5% decline.
  • Flash Australian Markit M'fing PMI improved this month, but the Services gauge deteriorated, though both remained in expansion.
• NZD/JPY sits at Y74.73, virtually unchanged on the day, after rising for the third day in the row on Thursday. A continued rally above the round figure/Jan 14 high of Y75.00/05 would bring Jan 8 cycle high of Y75.58 into play. Bears look for a dip through the 50-DMA/Jan 18 low at Y73.68/65, needed to give them a fresh impetus.
  • Japanese CPI deflation accelerated, with the index falling 1.2% Y/Y vs. exp. of a 1.3% slide. Core CPI printed at -1.0% Y/Y vs. exp. of -1.1%.
  • Jibun Bank M'fing PMI suggested that Japan's manufacturing sector returned into contraction, with headline index deteriorating to 49.7 from 50.0.
• New Zealand's 10-Year yield continues to operate close to a nine-month high of 1.108%, after receiving a boost from the strong CPI report & a strong round of RBNZ QE ops.
  • The QE operation saw relatively sizeable offers, while cover ratios for NZGB May '28 & May '31 printed at 4.96x & 5.30x respectively.