NZD Outperforms On Sticky Non-Tradeable Inflation, USD Slightly Firmer Elsewhere

Outside of NZD gains, broader USD trends are relatively steady, albeit with AUD and JPY slightly weaker. This likely reflects weakness against the NZD from a cross standpoint post the earlier CPI print.

• The BBDXY USD index is just above 1252.5, slightly firmer versus end Tuesday levels. In the cross asset space, US yields are a touch higher, led by the front end, but this only partially offsets Tuesday losses. US equity futures are down modestly at this stage.
• NZD/USD last tracked at 0.6070, just off session highs of 0.6074. This is 0.35% stronger than end Tuesday levels. The Q2 CPI print was a mixed bag, with headline weaker than expected, but non-tradables inflation was above market and RBNZ forecasts of 0.8%q/q, printing at 0.9%q/q.
• The central bank may want to see Q3 inflation data before cutting, which would push the first cut to November (instead of August). We do get more inflation data later on in terms of the RBNZ sector inflation model.
• The AUD/NZD cross is back to 1.1080, against recent highs above 1.1140, while NZD/JPY is up to 96.20. Pre data lows came in at 95.62.
• We have the Westpac leading index for Australia out shortly and BoJ bond buying ops a little later, but otherwise the data calendar is light for today.