NZD Edges Higher, Following Yields After Hawkish RBNZ

The kiwi is the top performing G10 currency today, pushing higher after RBNZ Governor Adrian Orr said that the central bank doesn’t want to risk a blowout in inflation expectations during an interview earlier, while NZ FinMin Willis stated the country is facing a significant economic downturn and estimates a structural operating deficit of around 1.5% of GDP for the current year.

• NZD/USD is up 0.29%, breaking back above 0.6100 to trade at 0.6114. The 14-day RSI is holding at 63, while the MACD indicator is showing decreasing green bars, while the US-NZ 2Y Swap is 2bps lower at -20bps, we are now 15bps lower from pre RBNZ highs. Initial resistance of 0.6152 (May 22nd highs) above here we target the 0.6200/20 (round number/ March 8 high), while initial support holds at 0.6071 (200-day EMA).
• AUD/NZD is down 0.20% at 1.0839, we bounced off the 200-day EMA at 1.0831. The AU-NZ 2Y swap is up 2.5bps to -0.79bps off about 20bps from pre-RBNZ. Initial resistance is 1.0900 (50-day EMA), while a break below initial support at 1.0831 (200-day EMA), would open up a test of 1.0800 (round number support).
• NZD/JPY continues to trade higher, up 0.33% at 95.864 and now trade back at 2007 levels. The USDJPY this morning hit new cycle highs of 156.90. Initial resistance is now 97.793 (Sept 2007 highs), while support is 94.09 (20-day EMA)