Kiwi Shows Strength Despite Negative Cross-Asset Signals

NZD/USD trimmed gains as BoE Gov Bailey rattled financial markets with a start reminder about the imminent termination of the UK central bank's emergency bond-buying programme, but the kiwi still finished the session as the best G10 performer.

• Broad equity markets were generally softer Tuesday, while the VIX index added 3.6%. The aggregate Bloomberg Commodity Index was slightly weaker as global recession fears lingered.
• The RBNZ's hawkish resolve demonstrated in last week's monetary policy review is offering some support to the kiwi, with participants adding rate-hike bets for November meeting since then. The OIS strip is currently pricing ~56bp worth of tightening next month, up from ~45bp in the wake of the previous review.
• The latest REINZ residential property data showed that the usual spring lift failed to materialise as sales were down 10.9% Y/Y. The Institute said they "expect sentiment to remain cautious" amid "increasing interest rates, tighter lending criteria, and concerns around the cost of living."
• Spot NZD/USD last seen at $0.5588, little changed on the day. Bulls need a rally above Oct 6 high of $0.5814, while bears keep an eye on Mar 19, 2020 low of $0.5470.
• Looking ahead, New Zealand's BusinessNZ Manufacturing PMI will hit the wires this Friday.