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NZD: NZD/USD Continues Its Slide Ahead OF RBNZ Tomorrow

NZD
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  • NZD/USD continues to slide ahead of the RBNZ meeting on Wednesday, the pair fell 0.55% on Monday to 0.6125 and marked the fifth straight day of losses, it now trades about 4% lower this month. The weakness has been due to the expectations of a 50bps cut, while the the USD has seen support following higher US Tsys yields, with the 2yr yield rising 36bps this month.
  • It's likely there will be a 50bps due to recent NZIER survey data suggesting growth and the labour market are weak, inflation is normalizing relatively quickly, while the recent 50bps cut from the Fed has opened the door, although there will be some concerns surround the strong NFP from Friday.
  • There is little in the way of data ahead of RBNZ tomorrow, focus will be largely on China today as they return from Golden week
  • Technically, NZD/USD is trading below the 20, 50 & 100-day EMAs while the 14-day RSI is 40. A break below key support at 0.6100 could lead to further declines towards 0.6046 and 0.6000 (Aug 14 lows). Conversely, a reversal above the 20-day EMA at 0.6230 could signal a recovery toward 0.6302 and 0.6380 (Oct 1 highs)
  • RBNZ dated OIS pricing has firmed a touch on Monday to 44.4bps or a 78% chance of a 50bps cut next week, while the November meeting also saw a 5bps softening in rate cut pricing to 91bps by years end. The market then prices a 25bps cut at each meeting through to May
  • Expiries: There are no expiries until post the RBNZ on Wednesday with 0.5700 ($700m), 0.5925 ($480m), 0.6050 ($601.24), 0.6250 ($482m)
  • The NZ-US 2yr swap has plunged to its lowest level since March 2020, falling 9bps on Monday to -22.5bps
  • Today the calendar is empty
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  • NZD/USD continues to slide ahead of the RBNZ meeting on Wednesday, the pair fell 0.55% on Monday to 0.6125 and marked the fifth straight day of losses, it now trades about 4% lower this month. The weakness has been due to the expectations of a 50bps cut, while the the USD has seen support following higher US Tsys yields, with the 2yr yield rising 36bps this month.
  • It's likely there will be a 50bps due to recent NZIER survey data suggesting growth and the labour market are weak, inflation is normalizing relatively quickly, while the recent 50bps cut from the Fed has opened the door, although there will be some concerns surround the strong NFP from Friday.
  • There is little in the way of data ahead of RBNZ tomorrow, focus will be largely on China today as they return from Golden week
  • Technically, NZD/USD is trading below the 20, 50 & 100-day EMAs while the 14-day RSI is 40. A break below key support at 0.6100 could lead to further declines towards 0.6046 and 0.6000 (Aug 14 lows). Conversely, a reversal above the 20-day EMA at 0.6230 could signal a recovery toward 0.6302 and 0.6380 (Oct 1 highs)
  • RBNZ dated OIS pricing has firmed a touch on Monday to 44.4bps or a 78% chance of a 50bps cut next week, while the November meeting also saw a 5bps softening in rate cut pricing to 91bps by years end. The market then prices a 25bps cut at each meeting through to May
  • Expiries: There are no expiries until post the RBNZ on Wednesday with 0.5700 ($700m), 0.5925 ($480m), 0.6050 ($601.24), 0.6250 ($482m)
  • The NZ-US 2yr swap has plunged to its lowest level since March 2020, falling 9bps on Monday to -22.5bps
  • Today the calendar is empty