Rallies To Fresh Highs On Dovish Fed Comments, RBNZ Out Today

NZD/USD broke to fresh highs late in NY trade on Tuesday. The pair reached a high of 0.6147, before easing modestly. We last track near 0.6135, having risen 0.60% for Tuesday's session. Aug 2 highs aren't too far away at 0.6169, then beyond that lies 0.6217, seen at the start of August. The 200-day EMA sits back at 0.6064.

• Broad based USD losses were evident late in US trade, following dovish comments from the Fed's Waller. The BBDXY lost a further 0.40% Tuesday and is now back at mid August levels.
• US yield losses were most prominent at the front end of the curve (the 2yr off 10bps to 4.75%). Fed Funds show a greater likelihood of a first cut landing in May with a cumulative 20bp priced vs 14bp yesterday. They build to a cumulative 101bp of cuts in 2024.
• NZ-US yield differentials have rebounded but NZD's strength has outperformed this trend recently. Equity indices were mixed, while commodity indices rose 1.0% for the aggregate Bloomberg index.
• The main focus today will the RBNZ decision. The market expects a firmly on hold outcome, leaving focus on the accompanying updated forecasts, statement and press conference (see our full preview here).