NZD Slips Ahead of RBNZ, Yen Gains Ground Post CPI

The USD BBDXY index sits lower compared to end Monday levels in NY, but only modestly. The BBDXY last near 1241.10, against earlier lows of 1240.9.

• The first part of the Tuesday session has unfolded in a similar fashion to yesterday's session, with NZD generally underperforming. This may reflect position squaring ahead of tomorrow's RBNZ decision.
• NZD/USD hit lows of 0.6151, but we now track back near 0.6160, still 0.20% weaker. NZD/USD overnight vol has spiked, now at 17.69. This is the highest levels since Dec 7th. The implied range for the cross in the next session is 0.6099-0.6227 based off a 74% probability.
• AUD/USD was dragged lower initially, but now sits unchanged for the session, last near 0.6540. A modest recovery in China/HK equities has likely helped, while iron ore has recovered a touch from recent lows, last near $116.35/ton. The AUD/NZD cross is back above 1.0600.
• USD/JPY has generally tracked lower, aided at the margins by stronger than expected national CPI data for Jan. We got to lows near 150.40, but sit slightly higher now.
• Japan 2yr government bond yields hit fresh highs back to 2011, but at 0.17% still leaves a large yield wedge with the USD.
• In the cross asset space, US equity futures sit down a touch, while US yields are close to unchanged.
• Looking ahead, in terms of data, there are US preliminary durable orders for January, December house prices and February consumer confidence. The Fed's Barr also speaks, as well as the ECB’s Elderson and BoE’s Ramsden.