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NZD Slumps Post RBNZ, USD Mostly Firmer Elsewhere

FOREX

The main theme today has been NZD weakness, post the RBNZ's dovish hold (at least relative to expectations). NZD/USD fell to a low of 0.6103 in recent dealings, after tracking at 0.6175/80 in pre RBNZ dealings. We were last near 0.6110/15, around 1% weaker for the session.

  • The main change from the RBNZ was the more neutral tone to the meeting assessment with November’s more hawkish elements removed. The tone suggested that the RBNZ is happy with where rates are for now. RBNZ dated OIS pricing closed 5-21bps softer across meetings. Pre RBNZ the market had attached a 29% chance of a 25bp hike at today’s meeting.
  • For NZD/USD a clean break sub 0.6100 could see mid Feb lows near 0.6050 targeted.
  • AUD/USD has been dragged lower by the NZD move and generally softer regional equity tone. AUDUSD is down 0.35% to 0.6520, close to session lows. Initial support is at 0.6496. AUDUSD fell briefly on the lower-than-expected January CPI outcome which came in unchanged at 3.4% y/y. But then fell sharply following the RBNZ decision. With kiwi underperforming, AUDNZD is 0.6% higher at 1.0665, slightly off session highs (1.0687).
  • There are steadier trends elsewhere, albeit with the USD firmer. The BBDXY is up close to 0.1%, last near 1242.75. USD/JPY was sub 150.40 earlier, but we now track back at 150.60
  • Looking ahead, Fed’s Bostic, Collins, Williams and BoE’s Mann speak. US Q4 GDP revisions are released as well as January inventories and trade balance. The European Commission February survey also prints.
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