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

AUSSIE-KIWI
MNI (London)
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.
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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