NZD/USD Bounces, NZ Housing Market Continues To Cool

NZD/USD clawed back its initial losses Monday as a report from NY Fed fuelled hopes that the upcoming CPI report may show that consumer inflation in the U.S. has cooled. New Zealand set its sights on domestic GDP data, coming up later this week.

• The pair rallied into the London open in tandem with the BBDXY index as participants digested hawkish ECB comments from over the weekend, which generated decent demand for EUR/USD.
• A survey from NY Fed indicated sharp decline in consumer inflation expectations over the forecast horizon, helping the greenback consolidate earlier losses. The data came out ahead of today's publication of Aug CPI figures. Annual inflation slowed to +8.5% in Jul and is expected to have eased further.
• Equity sentiment was positive, with benchmarks creeping higher across all timezones, albeit the VIX index also moved higher. The commodity complex firmed, with the BCOM index soaring to best levels since Sep 1.
• Back in New Zealand, the latest REINZ report showed that concerns related to rising interest rates and inflation amplified seasonal weakness in the property market last month. Prices were "weaker than expected," even as they fell in just four of the 16 monitored regions, as the major markets of Auckland and Wellington weighed on the aggregate figure. This resulted in the largest six-month drop in prices since REINZ records began in 1992.
• Elsewhere, the Cabinet announced a one-off public holiday on Sep 26 to mark the death of Queen Elisabeth II and decided to formally drop most of New Zealand's COVID-19 rules.
• NZD/USD trades at $0.6140 at typing, little changed on the day. A break above the 50-DMA ($0.6211) would bring Aug 25 high of $0.6251 into play. Conversely, bearish focus falls on round figure/Sep 7 low of $0.6000/0.5997.
• Reminder that New Zealand's BoP current account balance will cross the wires this Wednesday, with GDP coming up Thursday.