NZD Outperforms On Higher Local Yields/Global Equity Gains

NZD/USD comfortably finished top of the G10 rankings for Tuesday's session. Gains were around 1%, with the pair currently just under 0.5690, with next best SEK at +0.60%. NZD did run into some resistance above 0.5700, the 20-day EMA comes in just above this level. Early October highs sit just above 0.5800 as well. Overnight, the high during NY trading was near 0.5720.

• Sentiment continued to be buoyed by positive yield momentum. The 2yr swap finished up just above 5.14%, down from yesterday's intra-day highs of near 5.20%, but we are a good +25bps on levels compared to week ago.
• The NZ-US 2yr swap spread is back to +35bps, up from late September lows near flat. Market pricing for the terminal RBNZ rate sits around 5.24% in 2023, with the consensus for the November meeting shifting to a +75bps hike.
• A late surge in US equities, buoyed by firm earnings, has also aided sentiment.
• Overnight, whole milk dairy prices fell further, down to $3421, -4.25% on levels from two weeks ago. We are now back close to mid-August lows.
• There is no major NZ data until tomorrow's September trade figures.