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NZD Bounces On Sticky Domestic Inflation, But AUD/NZD Supported On Dips

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An NZD bounce has been the main focus in Asia Pac markets today, which came post firmer than expected domestic inflation pressures. The BBDXY sits little changed, last near 1251.5, as the major haven't shifted greatly against the USD.

  • NZD/USD last tracked near 0.6070, slightly off session highs (0.6082), but around 0.35% higher. Recent lows are marked just under 0.6040. The Q2 inflation report was a mixed bag, with weaker headline relative to expectations, while non-tradables eased but not as much as the market and the RBNZ projected (0.9% versus 0.8% forecast).
  • The RBNZ’s measure of core inflation from its sectoral factor model moderated to 3.6% y/y in Q2 from 4.2%, the lowest since Q3 2021 but still above the central bank’s 1-3% band.
  • The AUD/NZD cross fell to lows of 1.1073, but sits back at 1.1100 in recent dealings. As we noted in this piece here, there is risks of divergence between Aust and NZ CPI reads. Recent highs in the cross rest at 1.1152. AUD/USD has risen a touch, last near 0.6740.
  • USD/JPY has been steady for much of the session, last near 158.35, close to end levels from NY trade Wednesday.
  • In the cross asset space, US equity futures are lower, off 0.15-0.30%, with Nasdaq futures underperforming. US yields sit a touch higher, led by the front end, but this is only recouping modest losses from Tuesday trade in the US.
  • A wide ranging interview by US Presidential Candidate Trump (given to BBG) stated Fed Chair Powell would serve his full term, although Trump warned against cutting cuts ahead of the US election in November.
  • Looking ahead, we have UK inflation and a speech from the new UK PM. US data and more Fed speak is also out.
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An NZD bounce has been the main focus in Asia Pac markets today, which came post firmer than expected domestic inflation pressures. The BBDXY sits little changed, last near 1251.5, as the major haven't shifted greatly against the USD.

  • NZD/USD last tracked near 0.6070, slightly off session highs (0.6082), but around 0.35% higher. Recent lows are marked just under 0.6040. The Q2 inflation report was a mixed bag, with weaker headline relative to expectations, while non-tradables eased but not as much as the market and the RBNZ projected (0.9% versus 0.8% forecast).
  • The RBNZ’s measure of core inflation from its sectoral factor model moderated to 3.6% y/y in Q2 from 4.2%, the lowest since Q3 2021 but still above the central bank’s 1-3% band.
  • The AUD/NZD cross fell to lows of 1.1073, but sits back at 1.1100 in recent dealings. As we noted in this piece here, there is risks of divergence between Aust and NZ CPI reads. Recent highs in the cross rest at 1.1152. AUD/USD has risen a touch, last near 0.6740.
  • USD/JPY has been steady for much of the session, last near 158.35, close to end levels from NY trade Wednesday.
  • In the cross asset space, US equity futures are lower, off 0.15-0.30%, with Nasdaq futures underperforming. US yields sit a touch higher, led by the front end, but this is only recouping modest losses from Tuesday trade in the US.
  • A wide ranging interview by US Presidential Candidate Trump (given to BBG) stated Fed Chair Powell would serve his full term, although Trump warned against cutting cuts ahead of the US election in November.
  • Looking ahead, we have UK inflation and a speech from the new UK PM. US data and more Fed speak is also out.