Kiwi Creeps Higher Ahead Of RBNZ Policy Announcement

Fresh demand for NZD/USD emerged Tuesday as participants chewed over the latest developments in the Russia/Ukraine crisis, with some quarters questioning Moscow's willingness to move troops beyond the boundaries of Donbas pseudo-republics, with major stakeholders pledging commitment to diplomacy. Against this backdrop, the kiwi may have drawn some support from hawkish RBNZ musings ahead of today's monetary policy decision announcement.

• The Reserve Bank will deliver their first policy decision of 2022 and release accompanying MPS at 01:00 GMT/14:00 NZDT, with the press conference due to follow an hour later. The base case scenario is another 25bp OCR hike but market pricing and sell-side desks point to an outside chance of a bolder move. We also see a standard-sized rate rise as the most likely outcome (see our preview for more colour). It is worth adding that the RBNZ is widely expected to provide some details on unwinding its QE programme and may revise economic forecasts, including the OCR track.
• Looking further afield, New Zealand's retail sales ex inflation & trade balance will hit the wires on Friday.
• NZD/USD trades +7 pips at $0.6739 at typing after crossing above resistance from Feb 10 high of $0.6733 on Tuesday. Further gains past Jan 19 high of $0.6812 would fuel bullish appetites. Conversely, a pullback under Feb 14/4 lows of $0.6593/90 would return technical focus to the downside.