Kiwi Knee-Jerks Higher After RBNZ Announcement, Pulls Back Without Delay

The kiwi caught a bid after the RBNZ raised the OCR by 25bp, in line with expectations, but lost shine shortly thereafter. The currency briefly topped the G10 scoreboard despite underperforming ahead of the announcement, but has now erased all post-RBNZ gains.

• The RBNZ noted that "further removal of monetary policy stimulus is expected over time" and flagged cost pressures stemming from "supply disruptions and labour shortages" as well as rising energy prices. Policymakers signalled a risk that some capacity bottlenecks "become more persistent as we transition to a COVID-19 endemic state of the world."
• The OIS strip almost fully prices (implied ~96% probability) another 25bp rate hike at the next MPC meeting slated for November, when the Reserve Bank will also release their MPS.
• NZD/USD trades -10 pips at $0.6954 after topping out at $0.6979. Familiar technical levels remain in play.
• AUD/NZD last seen -9 pips at NZ$1.0463, holding a familiar range. Bulls need a break above Oct 1 high of NZ$1.0492 before targeting Aug 18 high of NZ$1.0542, while bears keep an eye on the 50-DMA at NZ$1.0452.