Kiwi Soars On Finance Ministry's Decision To Include Housing In RBNZ Remit

RBNZ matters and rallying commodity prices sent the kiwi flying on Wednesday, with NZD/USD marking its longest winning streak since Nov as it registered best levels since 2017. The pair experienced a brief bout of increased volatility as the RBNZ delivered its MonPol decision, tipping hat to decent economic data while highlighting the need for prolonged monetary stimulus. A former breakout level of $0.7315 limited the reaction dip and the rate bounced off there, as the kiwi rallied in syc with its commodity-tied peers. The NY/Asia crossover saw NZD/USD accelerate gains as NZ FinMin Robertson announced changing the RBNZ's policy remit to require the MPC to "take into account gov't policy relating to more sustainable house prices."

• Soaring housing prices have been a worry for a while and the FinMin floated the idea of amending the central bank's remit back in November, receiving a rather unenthusiastic response from Gov Orr. Since then, the RBNZ and gov't have both sought to crack down on housing price inflation, among others through the looming re-imposition of LVR restrictions.
• RBNZ Gov Orr & his colleagues appeared in front of parliamentary select committee this morning. He largely reiterated his familiar lines and noted that the Reserve Bank will tolerate occasional inflation overshoots. Chief Economist Ha told lawmakers that "a lot of the factors boosting housing prices we think will either diminish or turn around."
• RBNZ Gov Orr will wind up this week's RBNZ speak with an appearance at the Canterbury Chamber of Commerce in Christchurch tomorrow.
• Elsewhere, final ANZ Business Confidence comes out at the top of the hour, with ANZ Consumer Confidence & trade balance coming up tomorrow.
• Worth flagging that NZ$1.1bn worth of options with strikes at $0.7400 expire at today's NY cut.
• NZD/USD remains buoyant as the kiwi dollar sits atop the G10 pile in early dealing. The pair sits +8 pips at $0.7444, with bulls targeting Jul 27, 2017 high of $0.7558, a key near-term resistance. Bears look for a pullback under $0.7315, which represents Feb 24 low & a former breakout level.