### POV: RBNZ SECTORAL CPI MAY LIMIT....>

AUSSIE-KIWI: ### POV: RBNZ SECTORAL CPI MAY LIMIT UPSIDE IN AUD/NZD

The RBNZ's Q2 sectoral factor CPI model hit a 7-Year high of 1.7% Y/Y in Q2,

prompting the NZ/AU 2-Year IR swap differential to reverse course from the cycle

low, which could cap AUD/NZD.

- The recent move higher in AUD/NZD has been driven by the potential for MonPol

divergence between the RBA and RBNZ, with RBNZ Gov. Orr bringing a dovish tinge

to statements since assuming the role, by introducing the possibility of an OCR

cut to the RBNZ statements. The sectoral CPI release could alter the broader

view on the NZD (CFTC data shows a notable net short position in NZD).

- TECHNICALS: The pair failed to take out the 30 Jan low (NZ$1.1010) on its

recent move higher, which provides the key resistance point going forwards.

- RISKS: A strong AU CPI release, further questions over NZ growth; RBNZ

rhetoric playing down the uptick in its CPI model; the RBA building on the

reinstatement of the line that the next move in the cash rate would likely be

up, rather than down, in the mins of the July MonPol meeting; nearby tech

support at the 200-DMA (NZ$1.0861), which held on Tuesday.