NZD/USD Pares Post RBNZ Gains To Close Below 0.6100

The Kiwi finished Tuesday's session up 0.08% at 0.6097, while the BBDXY finished a up 0.25% at 1,250.76. The more hawkish RBNZ will continue to be the focus, with little else on the local calendar today, Governor Orr spoke at the parliamentary committee earlier this morning where he mentioned CPI inflation is slowing but the decline “is being being tempered by parts of the economy that I would say are less sensitive to interest rates”.

• The NZD/USD hit a high of 0.6152 post RBNZ on Tuesday, but was unable to hold onto those gains, slipping throughout the day on higher US yields and slightly weaker equities. The release of FOMC minutes caused a rally in the USD, which saw the pair then make lows of 0.6083, we recovered a touch heading into the close to close up 0.08% for the session.
• Key levels to watch: Initial resistance of 0.6152 (May 22nd highs) above here we target the 0.6200/20 (round number/ March 8 high), while initial support holds at 0.6071 (200-day EMA).
• The US-NZ 2y is 10bp lower at -18bps
• RBNZ Governor Adrian Orr, speaking to a parliament select committee, highlighted that while CPI inflation is slowing, domestic inflation remains high and less responsive to interest rates, with minimal decline from 5.9% to 5.8% in the first quarter. Orr noted increased costs in rents, insurance, and taxes, attributing persistent inflation to population growth outpacing housing construction. He cautioned that continued high inflation could entrench expectations, leading to a vicious cycle, and urged price setters to stabilize prices to mitigate labor market impacts, per BBG.
• Option expiries:0.6175 (NZD479.4m), 0.6125 (NZD438.8m) 23rd NY Cut while notable upcoming strikes are 0.5915 (NZD434m May 24), 0.6100 (NZD354.5m May 24)
• Looking ahead: Retail Sales Ex Inflation at 08:45 AEST