Kiwi Outperforms After RBNZ Raises OCR 50bps

NZD is the strongest performer in the G-10 space, bouncing after the RBNZ raised the OCR by 50bps to 5.25%. Markets had priced in a 25bp hike with only 1 economist of the 22 surveyed by Bloomberg looking for a 50bp hike.

• NZD/USD firmed to $0.6380 in the immediate aftermath of the decision being paring gains to sit ~0.5% higher at $0.6345/50. ANZ revised their terminal rate call up to 5.5% with a 25bp hike in May expected. Westpac also look for a 25bp hike in May noting that the RBNZ seems intent on getting the OCR to 5.5% the level they saw as sufficiently contractionary in February.
• AUD/USD dragged higher by the RBNZ and comments for RBA Gov Lowe noting that the tightening cycle isn't over, however the pair couldn't hold gains and now trades little changed.
• Yen has observed relatively narrow ranges, USD/JPY prints at ¥131.65/75. The final March print of Jibun Bank Services PMI printed this morning at 55.0 rising from 54.2. The Composite measure rose to 52.9 from 51.9 in March.
• Elsewhere in G-10 moves have had little follow through with ranges respected for the most part.
• Cross asset wise; 2 Year US Treasury Yields are ~+3bps and BBDXY is little changed as are E-minis.
• The final prints of EU, German and French Services PMI headline in Europe today. Further out there is a slew of US data including ADP Employment, Trade Balance, Services PMI and ISM Services survey.