Kiwi Goes Offered After 25bp OCR Hike, Risk-Off Flows Kick In

The RBNZ raised the OCR by 25bp in a back-to-back move and forecast a more aggressive tightening campaign in a bid to tame surging inflation. Their move matched broader expectations, but the kiwi dollar went offered as some more hawkish participants had anticipated a 50bp hike (market pricing had been pointing to a ~33% chance of such a scenario), with the MPC not scheduled to meet again until February.

• NZD/USD faltered past the $0.6900 mark, printing worst levels since Oct 6. AUD/NZD crossed above its 50-DMA, narrowing in on key resistance from Nov 16 high.
• Broader risk-off sentiment rubbed some salt into the kiwi's wound, while sapping strength from other high-beta currencies.
• USD/JPY peeked above yesterday's high, printing levels not seen since 2017, before pulling back as the yen took the lead in G10 FX space. A downtick in U.S. e-mini futures lent support to JPY as Japanese markets reopened after a public holiday.
• German Ifo Survey takes focus in Europe, while the U.S. docket is headlined by the second reading of GDP as well as core PCE & weekly initial jobless claims.
• Comments are due from ECB's Schnabel & Panetta as well as BoE's Tenreyro, while the FOMC will publish the minutes from their most recent monetary policy meeting.