Free Trial

Kiwi Knee-Jerks Higher After Double-Barrel OCR Hike, Yen Sell-Off Continues


Post-RBNZ demand for the kiwi dollar quickly dissipated as the details of monetary policy review came under scrutiny. NZD crosses jumped in the initial reaction as the Reserve Bank raised the OCR by 50bp in the first half-point hike since 2000 citing concerns about mounting inflationary pressures. The upswing got unwound as the minutes suggested that the RBNZ has front-loaded policy tightening without necessarily seeing a higher terminal rate. Policymakers noted that they delivered a larger hike "now, rather than later" as a result of least regrets analysis. The kiwi is the worst G10 performer as we type.

  • USD/JPY continued its unrelenting bull run, albeit without re-testing the Y125.76/77 cycle highs printed earlier this week. FinMin Suzuki reiterated that rapid FX moves are "undesirable" but the yen ignored his comments.
  • The BoC is set to deliver its monetary policy decision, with most looking for a 25bp rate hike. It will come alongside the Bank's Quarterly Monetary Policy Report. The loonie caught a light bid amid positioning ahead of the policy announcement.
  • Elsewhere, BoJ's Kuroda is due to speak today, while key data releases include UK inflation figures & China's trade balance.

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.