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Market Preference For Safety Prompts Kiwi To Refresh Two-Year Lows

NZD

The kiwi dollar lost ground Monday, coming under pressure from broader aversion to risk, with NZD/USD plumbing fresh two-year lows as a result.

  • Better than expected NFP data reported by the U.S. last Friday ascertained markets that the Fed will need to continue acting with hawkish resolve to tackle inflation.
  • Lingering China COVID-19 worry & punitive action taken by China's antitrust regulator against local tech giants helped spoil the mood in Asia.
  • Cross-asset signals made up for an unfavourable backdrop for NZD/USD as major equity benchmarks traded in the red, while BBG Commodity Index struggled for any meaningful gains.
  • The kiwi outperformed its Antipodean cousin, with AUD/NZD charting a key bearish reversal pattern, as AU/NZ 2-Year swap spread faltered.
  • NZD/USD last deals at $0.6113, little changed on the day. Technical outlook remains bearish, with initial focus on the $0.6000 mark. Bulls look for a rebound above Jul 4 high of $0.6252.
  • Reminder that the RBNZ will announce its monetary policy review this Wednesday (our usual preview is forthcoming). There is broad consensus that the Reserve Bank will hike the OCR by another 50bp. Money markets concur, with the OIS strip fully pricing such a move.
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