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Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor

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NZD/USD ground lower Tuesday, but trimmed losses in NY hours as initial risk-off impetus fizzled out. The rate round tripped from a fresh multi-month low of $0.6881 in the process.

  • The first half of this week has seen participants unwind some of the earlier RBNZ tightening bets. Implied odds of a 25bp OCR hike in August fell to 66% from 88% last Friday, with full two hikes by the end of this year no longer fully priced in.
  • GDT Price Index extended losses at yesterday's auction, with whole milk powder falling 3.8%. Dairy prices fell for the seventh consecutive auction.
  • The trans-Tasman travel bubble took another hit. New Zealand pressed pause on quarantine-free arrivals from South Australia, but left the travel corridor with Queensland operational.
  • New Zealand's credit card spending headlines the local docket today and during the remainder of this week.
  • NZD/USD trades flat at $0.6920 as we type. Initial downside focus falls on yesterday's low of $0.6881 and a break here would open up the $0.6800 mark. Conversely, a jump above Jul 15 high of $0.7045 would bring Jul 7 high of $0.7061 into play.